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Proparco participates, with USD 15 million, to a 7-year USD 90 million syndicated debt facility to strengthen a federation of financial cooperatives in El Salvador: Federación de cajas de crédito y de bancos de los trabajadores, Sociedad Cooperativa de Responsabilidad Limitada de Capital Variable (Fedecrédito).

Aim of the syndication is to boost inequality reduction, financial inclusion and biodiversity conservation in El Salvador by supporting Fedecrédito and its close to 1 million ultimate members. FMO, the Dutch development bank, arranged the syndication and kept a stake of USD 30 million while DEG, Proparco, KFW, the eco.business Fund and Triodos Investment Management participated with USD 15 million each.

Inequality reduction

Fedecrédito is a federation of financial cooperatives in El Salvador, leading a network of 55 member cooperatives to which it provides technical assistance and funding. Close to 1 million members, consisting of Micro, Small, and Medium sized Enterprises (MSMEs), as well as low-to-mid income Salvadorians own the 55 cooperatives which own 100% of Fedecrédito. El Salvador is Central America’s smallest and most densely populated country, with a population of about 6 million people. By supporting Fedecredito’s growth, about one-sixth of the Salvadoran population are being benefited thus contributing to inequality reduction.

Financial inclusion

Fedecrédito and its member cooperatives have been serving MSMEs and low-to-mid income Salvadorians in urban and rural areas for more than 75 years. With over 630 service points throughout El Salvador, Fedecrédito holds the most outreaching and largest banking network in the country. The network plays an important role to El Salvador’s financial inclusion, as the service points are always reachable within a 20 kilometer distance anywhere in the country.

Biodiversity conservation

The purpose of the syndicated loan is to provide funding ultimately to MSMEs, with a portion especially dedicated to sustainable use of natural resources and biodiversity conservation activities selected by the eco.business Fund. The activities selected are the result of on-field work performed by the fund in El Salvador with the cooperation of Fedecrédito.