Fedecredito is a co-operative society with limited liability and variable capital. It is owned by owned by 55 member institutions. The member institutions are owned by their co-operative members (606,022 members as of September 2009).

The proposed investment is remittance-backed lending of up to $30 million for up to 7 years.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

* These investment figures are indicative

Fedecredito is headquartered in San Salvador. It has over 104 service points in 14 regions in El Salvador.

Scaling up microfinance: The project will help scale up financial institutions that provide financial services to the poor by providing FDC commercial funding to expand operations, enhance capacity, and increase outreach. Demonstration effect: The project will further demonstrate the business case for microfinance, and encourage more lenders/investors to provide funding to FDC in the future. Access to financial and non-financial services for micro-enterprises and low-income households: The project will benefit this target market, in terms of increased access to financial services which will stimulate business activity and create jobs. Establish a precedent for FDC (as well as other similar entities which are recipients of/settlement platforms for offshore, hard currency, remittance flows and who focus on bottom-of-the-pyramid business activities) to obtain attractively priced, longer tenor, international funding based on remittance flows.

IFC will play a catalytic role in establishing a funding approach that could be used in the future to raise additional attractively priced longer-tenor financing from other lenders/investors including IFIs, as well as private and public sector entities at a time when fundraising is particularly difficult.

This project involves IFC support for a cooperative of Microfinance banks to provide loans for its members and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

Considering the nature of activities supported, the project will be required to:
- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the Microfinance exclusion list.
- Identify qualified persons to manage and implement the procedure.
- Commit to require borrowers to establish a similar screening process to avoid supporting activities on the IFC Microfinance Exclusion List.
- Demonstrate commitment and resources to implementing the procedure.
- Demonstrate commitment to applying the labor standards established by the IFC Performance Standard Labor and Working Conditions.
- Submit a periodic report to IFC as per a format to be provided by IFC.