eco.business Fund invests in a leading Peruvian microfinance institution

Luxembourg and Cusco, Peru, 05 June 2024 – eco.business Fund has announced a landmark investment in Caja Municipal de Ahorro y Crédito Cusco S.A. (Caja Cusco), a leading microfinance institution in Perú, through a senior loan totaling USD 15 million equivalent in local currency. The loan has a 5-year maturity and is structured as a synthetic facility. Moreover, this loan is an innovative instrument designed to combine environmental and financial benefits.  

Caja Cusco presents a compelling opportunity for eco.business Fund to foster a long-term partnership with an important player in the region’s microfinance sector, a sector with great development impact potential and of interest for the fund.  By partnering with Caja Cusco, the Fund aims to support small-scale producers in rural areas of Peru, where agribusiness plays a crucial economic and social role. This transaction will enhance access to finance for micro, small, and medium-sized enterprises (MSMEs) , while supporting them on implementing or growing their sustainable practices. Caja Cusco is a great partner due to its commitment to supporting rural smallholders in the agricultural sector, as it has shown great interest and leadership with various initiatives aligned to this objective. Moreover, this investment will enable Caja Cusco to keep expanding and diversifying its funding sources by attracting new financiers that may help Caja Cusco meeting its long term environmental and social objectives.

The earmarked funds are expected to catalyze Caja Cusco's efforts in financing sustainable practices, promoting biodiversity conservation, sustainable use of natural resources, and climate change adaptation. The combined financing and technical support will foster a sustainable customer base, build resilience to climate change, and lead to environmental benefits and improved productivity.

"This investment demonstrates our commitment to fostering sustainable development in Peru's agribusiness sector focusing on smallholders," said Michael Evers, Chairperson of the fund’s Board of Directors. "Caja Cusco's robust Environmental and Social Management System (ESMS) and dedication to promoting sustainable practices within the agriculture sector align perfectly with our mission. We are confident that Caja Cusco's strengthened capabilities and expanded green portfolio will significantly contribute to achieving our shared sustainability goals." he added.

“In terms of impact, Caja Cusco sets an example for other microfinance institutions in the country. It is one of the few CMACs that has established a robust ESMS, enabling it to better assess and manage environmental and social risks," said Yovana Enriquez, Chief Financial Officer of Caja Cusco. "Additionally, our commitment to promoting sustainable practices within the agriculture sector, such as financial products tailored to the risks and requirements of each region and crop, supports smallholders in adopting practices like installing biodigesters and cultivating native species."

To complement the investment, eco.business Fund will provide technical assistance to strengthen Caja Cusco's sustainability strategy and expand its green portfolio. The efforts will be directed at increasing Caja Cusco’s capacities to foster a positive footprint within its clients and increase resilience and adaptation to climate change. The support is expected to be complemented with interventions with end-clients that may have a lasting environmental and social impact.    

The projected development impact of this investment is substantial, contributing towards several Sustainable Development Goals (SDGs), including Zero Hunger (SDG 2), Decent Work and Economic Growth (SDG 8), Climate Action (SDG 13), Life on Land (SDG 15), and Partnerships for the Goals (SDG 17).

“This transaction is a milestone in an extensive effort by the fund in Peru. Through numerous interactions with various stakeholders and key players in the country, the fund gained a comprehensive understanding of the needs within the microfinance sector, as well as the specific requirements of Caja Cusco and its end-clients. This investment will enhance their capabilities to support smallholder producers with tailored financial products, further develop their green lending strategy, and help guide Peruvian MSMEs towards more sustainable production methods.” said Hector Gomez Ang, Director for the fund at Finance in Motion.

About Caja Municipal de Ahorro y Crédito Cusco

Founded in 1988, Caja Municipal de Ahorro y Crédito Cusco (Caja Cusco) is a microfinance institution in Peru with over 35 years of experience in providing financial services to micro and small-sized enterprises. As of March 2024, Caja Cusco has a loan portfolio of USD 1.5 billion, serving over 450,000 clients and 1.2 million depositors through a network of 139 branches nationwide. Caja Cusco is dedicated to financial inclusion, particularly in rural areas where access to traditional banking is limited. As a leader in sustainability, Caja Cusco is highly committed to the development of the smallholder rural farmer in Peru.

Learn more at https://www.cmac-cusco.com.pe/ 

About the eco.business Fund

The eco.business Fund aims to promote business and consumption practices that contribute to biodiversity conservation, to the sustainable use of natural resources, and to mitigate climate change and adapt to its impacts in Latin America, the Caribbean, and sub-Saharan Africa. By providing financing for business practices that conserve nature and foster biodiversity, the fund seeks investments with both environmental and financial returns. The eco.business Fund provides financing through three avenues: local financial institutions that are committed to the fund’s mission and which have the capacity to reach its target group; directly to its target group (i.e. companies and producers); and in the case of sub-Saharan Africa, to real sector intermediaries. The fund supports sustainable operations in the sectors of agriculture, fishery (including aquaculture), forestry and tourism. Target beneficiaries are those that hold an eligible sustainability certification or those taking out a loan to make eligible sustainable investments in their operations.
Operating together with each of the two sub-funds, are two development facilities that provide high-impact technical assistance to investment partners and final borrowers.
An impact investment fund advised by Finance in Motion, the eco.business Fund was initiated by Germany’s KfW Development Bank and Conservation International with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ).

The sub-fund for sub-Saharan Africa was formally launched in 2020 with initial funding from BMZ. 

The sub-fund for Latin America and the Caribbean has received funding from the European Commission as well as from numerous other prestigious development finance institutions and institutional investors.
For more information please visit www.ecobusiness.fund 

About Finance in Motion   

Finance in Motion is a global impact asset manager focused exclusively on sustainable development in emerging markets and developing economies. The company structures, manages, and advises impact investment funds that bring together public and private investors to address climate change, strengthen biodiversity conservation, foster the sustainable use of natural resources, improve livelihoods, and promote economic opportunities. 

For more information, please visit us at: www.finance-in-motion.com 
You can also follow us on X @financeinmotion and on LinkedIn
 

Media Contact Finance in Motion GmbH
Nusha Westhoff,
Director Marketing & Communications
Carl-von-Noorden-Platz 5
60596 Frankfurt am Main
Tel. +49 (0)69 271 035 0
E-Mail: info@finance-in-motion.com 
www.finance-in-motion.com

Media contact Caja Municipal de Ahorro y Crédito Cusco
Vanessa Canales
Head of Communications
Av. De la Cultura 1624 (Cusco, Perú)
Phone: 984 383 962
Email:  lcanales@cmac-cusco.com.pe