Luxembourg and Arequipa, 21 December 2023 - eco.business Fund, advised by Finance in Motion, has announced it is extending a USD 20 million loan equivalent in local currency to Caja Arequipa, a Peruvian financial institution that lends to low-income individuals in rural provinces where agribusinesses have a significant environmental and social impact. The loan is part of a USD 50 million loan equivalent in local currency to Caja Arequipa structured by IDB Invest, the private sector arm of the IDB Group.
Caja Arequipa is a microfinance institution with a 37-year track record. It has a broad reach across Peru and primarily focuses on lending to micro and small agricultural businesses. Caja Arequipa is the only Peruvian financial institution of its kind to measure its CO2 emissions. It actively participates in various sustainability frameworks, including the Global Alliance for Banking Values and the Global Reporting Initiative.
Agriculture employs more than a third of Peruvians living in rural areas, and the sector has experienced impressive recent growth, contributing to a steady decline in levels of rural poverty. Nevertheless, many small-scale farmers still need support to obtain affordable credit. Currently, 60% of formal micro-, small- and medium enterprises (MSMEs) in Peru are led by women, and 70% of informal MSMEs have women in charge.
The transaction marks another milestone in eco.business Fund’s strategy of promoting financial inclusion and fostering sustainable practices among small-scale farmers in Latin America. Additionally, it demonstrates its commitment to delivery, client service, and flexibility. Finally, this transaction will be the first syndication the fund participated in that involves a local currency synthetic structure.
Through this investment, the fund is expected to contribute to Sustainable Development Goals (SDGs) 2 (zero hunger), 8 (decent work and economic growth), 15 (life on land), and 17 (partnerships for the goals).
In addition to the loan, Caja Arequipa will receive technical assistance from eco.business Fund's Development Facility. This will include training commercial staff to identify and mitigate environmental and social risks within their portfolio. It will also include providing additional training to Caja Arequipa’s staff through the fund’s Sustainability Academy. This will build capacity and increase sustainable farming know-how among the employees at the institution and its clients.
eco.business Fund chairperson Michael Evers said: “Peru is a strategic country from a diversification perspective and has a vibrant agribusiness sector. This loan aligns well with our mission to promote sustainable use of natural resources, address climate change, and reach the previously unbanked in Peru, especially female entrepreneurs in the agribusiness sector.”
Hector Gomez Ang, Regional Head – Latin America and the Caribbean at Finance in Motion, eco.business Fund’s advisor added: “With this loan, the fund aims to accelerate the adoption of sustainable practices by smallholder producers in Peru, promoting biodiversity conservation, and the sustainable use of natural resources.”
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.
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.
About Caja Arequipa
With over 37 years of experience, Caja Arequipa is the leading institution in the CMAC system (since October 2007). As of September 2023, it has a loan portfolio of USD 2.2 billion and provides microcredit services to small and medium-sized enterprises (MSMEs), supporting a portion of the Peruvian population without access to traditional banking. It is the only CMAC with a Financial Strength rating of A. The rating is supported by its financial strength and a solvency level of 14.6%, as of September 2023. The entity serves more than 580,000 clients and 1.3 million depositors through a branch network of 180 branches located nationwide. Its efforts and leadership in digital transformation keep it at the forefront, with the best financial mobile app in Peru (2022 and 2023). This year, Caja Arequipa achieved first place in the Latin American financial innovation competition organized by the Latin American Federation of Banks ("FELABAN").
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $16.3 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
Media contact eco.business Fund
Phone: +49 69 271 035 742