42868 - Contactar Loan

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Summary of Investment Information

Project Number

42868

Company Name

CORPORACION DE CREDITO CONTACTAR

Date SPI Disclosed

Mar 21, 2022

Country

Colombia

Region

Latin America and the Caribbean

Projected Board Date

Apr 20, 2022

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 5, 2024

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : May 12, 2022
Signed : Nov 15, 2022
Invested : Dec 27, 2022

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed investment in Corporación de Crédito Contactar (Contactar or the Company) consists of: (i) an up to five-year senior loan of up to US$15 million to be provided in the Colombian peso equivalent for IFC’s own account, and (ii) up to five-years parallel loans of up to US$25 million to be provided in the Colombian peso equivalent, to be mobilized by IFC on a best-efforst basis.

The purpose of the proposed investment is to support the Company’s lending program to microenterprises in Colombia with a focus on rural areas and frontier regions (the Project). Under the Project, IFC would be supporting a midsize non-deposit-taking microfinance institution (MFI) to reach underserved microenterprises.

Associated Advisory Engagement

IFC’s advisory services will support Contactar in building the foundations for innovating its financial offering by designing financial products for target rural and urban customers and exploring alternative expansion business models through third-party ecosystems in rural and urban markets to distribute its products and increase outreach.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

IFC’s additionality through the Project is both financial and nonfinancial. Financial additionality will be provided in the forms of: (i) financing structure, as IFC will expects to provide financing in local currency and at a fixed interest rate, conditions that are not readily available in the Colombian market; and (ii) resource mobilization, as IFC will seek to play a role in mobilizing additional investors. Nonfinancial additionality will be provided in the forms of: (i) knowledge, innovation, and capacity building, as IFC will seek to support Contactar in strengthening its financial offering and exploring new expansion business models through third-party ecosystems in rural and urban markets following the Company’s participation in IFC’s DigiLab Finance program in 2020; and (ii) standard-setting, as IFC will seek to support Contactar in improving its E&S management systems.

E&S Category Rationale / Risks and Mitigation

The Project consists of an up to five-year senior loan of up to US$15 million to be provided in COP equivalent for IFC's own account, and up to five-year parallel loans of up to US$25 million to be provided in COP equivalent to be mobilized by IFC on a best-efforts basis. The Project will be solely used to support the Company's lending program to microenterprises in Colombia. The overall E&S risks of the investment are low; therefore, the Project has been categorized as FI-3 in accordance with the IFC's Sustainability Framework. The project will not support activities involving (a) involuntary resettlement; (b) adverse impacts on indigenous peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; (d) substantial occupational health and safety risks; (e) the conversion or degradation of natural habitats as defined by IFC PS 6 - 'Biodiversity Conservation and Sustainable Management of Living Natural Resources'; or (f) category A or coal-related sub-projects. IFC's applicable requirements for this Project will be the IFC Exclusion List and relevant host country E&S laws and regulations. As part of the Project, Contactar will be required to: i) appoint an E&S Officer, ii) develop and implement an ESMS in line with IFC's requirements as well as provide staff training, and iii) inform IFC in the case of any change in the nature of its operation that may affect E&S risks of the supported portfolio.

Contacts

For Inquiries About the Project, Contact

Corporación Nariño Empresa y Futuro Contactar
Cristina Muñoz Chaves
Finance and Administrative Director
+57 (2) 724 43 25 Ext. 204
cristinamunoz@contactarcolombia.org
Cra 6 No. 22-90 Avenida Bolivar, Pasto, Colombia
https://www.contactarcolombia.org/

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