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Job creation in Colombia
OPEC Fund and Davivienda support women-owned MSMEs, social housing and green building
As published in the 03/2020 issue of the OPEC Fund Quarterly.
The OPEC Fund has signed a US$50 million term loan agreement in favor of Banco Davivienda in Colombia. This financing will enable the bank to strengthen its capital base under Basel III requirements (New Tier 2) and sustain the growth of its lending portfolio to women-owned, micro-, small- and medium-sized enterprises (MSMEs), social housing, and green building projects in Colombia.
This subordinated loan is the OPEC Fund’s first private sector transaction in Colombia and is part of a syndication arranged by the International Finance Corporation (IFC). By providing the loan, the OPEC Fund is helping to address the lack of financial access for underserved segments of the Colombian population.
Specifically, the project will support low-income households’ access to mortgages and improve female entrepreneurs’ access to funding. It will also drive a counter-cyclical action, since many people are facing additional challenges as a result of COVID-19. In addition, the project’s support for certified green buildings will benefit the Colombian people through an improved quality of life and job creation.
OPEC Fund Director-General Dr Abdulhamid Alkhalifa said: “The OPEC Fund is pleased to be providing funding to a systemically important bank in Colombia. Liquidity in the banking sector is more vital than ever, given the economic effects of COVID-19. Alleviating credit constraints for women and MSMEs will help to diversify the economy and support job creation. Supporting development must have equality and inclusiveness at its core.
The OPEC Fund supports development projects aligned with the United Nations Agenda 2030 and Sustainable Development,” Dr Alkhalifa continued. “This loan supports inclusive development in Colombia, impacting Sustainable Development Goal (SDG) 8 on decent work and economic growth, SDG 5 on gender equality, and more generally, SDG 10 on reduced inequality.”
Efraín Forero, CEO of Banco Davivienda, stated: “This operation came at an excellent moment to support our clients and strengthen our sustainability strategy of supporting female entrepreneurship, financing sustainable projects and helping Colombian people fulfill their dreams of owning their own home. Also, this credit allows us to strengthen our capital ratios in today’s challenging business environment.”
While this is the first OPEC Fund private sector project in Colombia, the organization has supported the country's development via public sector and grant finance for more than two decades.