28799 - FDL Nicaragua

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Summary of Investment Information

Project Number

28799

Company Name

FONDO DE DESARROLLO LOCAL

Date SPI Disclosed

Aug 27, 2013

Country

Nicaragua

Region

Latin America and the Caribbean

Projected Board Date

Sep 27, 2013

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 3, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Dec 3, 2013
Signed : Feb 3, 2014
Invested : Mar 21, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of a financing package of US$7 million to Fondo de Desarrollo Local (“FDL”, “the Institution”, or the “client”), the largest microfinance institution (“MFI”) in Nicaragua. The proposed project aims at supporting FDL’s expansion plan, allowing the Institution to expand its on-lending in the rural agribusiness sector and micro-entrepreneurs in Nicaragua through its network of rural branches.

The proposed financing package will be supported by the Private Sector Window of the Global Agriculture and Food Security Program (“GAFSP”). GAFSP funding plays a catalytic role to create opportunity to support innovative private sector investments and deliver a level of additionality and impact beyond what is possible through IFC’s regular operations.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
Equity

Development Impact

(i) Access to finance: The Project will increase the availability of financing to the underserved rural and agribusiness sectors, primarily small producers.
(ii) Employment generation: The Project will contribute to the generation of new direct and indirect jobs through the scaling up of producers.
(iii) Demonstration effect: IFC''s re-engagement with the sector together with the successful allocation of funding to rural agri producers is expected to motivate others to reactivate their support to the microfinance sector in Nicaragua, and increase/venture into the agribusiness sector.

(i) Counter cyclical support: Through this project IFC will be providing counter cyclical support by providing funding to the rural agricultural sector, for which funding remains limited, and diversify FDL''s funding base.
(ii) Sector knowledge: IFC can bring and share its global and local microfinance expertise with the Institution.
(iii) Stamp of approval: IFC''s support will provide a stamp of approval for FDL''s business model and the Nicaraguan microfinance sector in general, which will allow the Institution to attract potential investors and additional sources of funding.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of a of US$7 million loan for IFC’s own account and IFC as implementing entity of GAFSP to provide funding to support rural agribusiness and micro-entrepreneurs in Nicaragua through FDL. FDL is a non-profit microfinance organization established for the purpose of providing financial services to micro, small and medium size rural and urban entrepreneurs which allows them to increase their level of life and capital. The overall portfolio risk is considered to be low and to carry limited adverse environmental and social impacts. This project has been categorized as an FI-3 in accordance with IFC’s Sustainability Framework. For this project, the client will be required to: (i) Implement an ESMS to ensure that financing provided avoids supporting activities on the IFC MFI Exclusion List and comply with local laws, (ii) Nominate an ESMS Officer, (iii) Comply with the requirements of the Performance Standard 2 Labor and Working Conditions, and (iv) submit a periodic report as per a format to be provided by IFC.

Contacts

For Inquiries About the Project, Contact

Elizabeth Campos F.
Vice-Gerente General Financiera
Fondo de Desarrollo Local (FDL)
Tel.: +(505) 2277-4245
mailto:ecampos@fdl.org.ni
http://www.fdl.org.ni

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