Stability for growth in Nicaragua

OFID supports agriculture productivity, climate change resilience and financial inclusion in Central America.

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OFID has provided a subordinated loan to BANPRO bank of Nicaragua of US$10  million – which has been matched by the French Development Agency PROPARCO for a total financing of US$20 million – that will contribute to strengthening BANPRO’s capital structure. The funding will also be used for on-lending to small-and medium-sized enterprises (SMEs).

Although poverty has decreased during the last ten years, Nicaragua remains the second poorest country in Latin America. The Central American country is dependent on agricultural productivity for exports, as well as for food security. But recent extreme weather has brought devastating droughts and floods to the nation of 6 million people.

Although poverty has decreased during the last ten years, Nicaragua remains the second poorest country in Latin America. The Central American country is dependent on agricultural productivity for exports, as well as for food security. But recent extreme weather has brought devastating droughts and floods to the nation of 6 million people.

BANPRO, Nicaragua’s leading bank, is mobilizing private sector financing to help it better support Nicaragua’s food security. About 20 percent of the bank’s portfolio is dedicated to agriculture. This financing is helping small-scale farmers to secure their businesses. More specifically, BANPRO is expected to use three-quarters of the new funds to finance irrigation across Nicaragua that will help promote financial inclusion for the most vulnerable populations living in the country’s most underserved regions (in particular, those along the Atlantic coast).

The long-tenor and nature of the funding supplied helps provide BANPRO with a stable platform for future investment and growth. As a subordinated loan it will also have a multiplier effect by strengthening the Bank’s capital base and so sup- porting the expansion of its loan book and SME portfolio allocation.

“We’re pleased to support MSME’s and financial inclusion among some of the world’s most vulnerable communities,” says OFID’s Acting Assistant Director-General, Private Sector and Trade Finance Operations Tareq Alnassar. “OFID is fully committed to supporting the United Nations Sustainable Development Goals and this loan agreement contributes to a number of SDG focus areas such as ending poverty, achieving food security and promoting inclusive and sustainable economic growth, employment and decent work for all.”

The government of Nicaragua is responding to the need to support agriculture by formulating national policies to promote production and output, while targeting sustainable agriculture, water and resource management and improving access to credit. Working together, the public and private sectors have the potential to make significant progress within the 2030 Agenda for Sustainable Development.