30480 - FONDESA

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Summary of Proposed Investment

Project Number

30480

Company Name

FONDO PARA EL DESARROLLO, INC. - FONDESA

Date SPI Disclosed

Sep 7, 2011

Country

Dominican Republic

Industry

Financial Markets

Projected Board Date

Oct 10, 2011

Status

Completed

Sector

Microfinance and Small Business - Non Commercial Banking

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Dec 12, 2011
Signed : Apr 23, 2012
Invested : Nov 30, 2012

Project Description

The proposed investment (the “Project”) consists of a local currency loan of approximately DOP 190 million (up to $5 million equivalent) for Fondo para el Desarrollo, Inc. (FONDESA or the “Company”). With an average loan size of approximately $1,000, FONDESA is an NGO focused on providing financial services to micro entrepreneurs, low and middle income segments and rural populations in frontier regions and small provinces across the north and northwest of the Dominican Republic, where commercial banks have limited presence. The Dominican Republic still has a very unequal distribution of financial services: 76% of the financial system resources are concentrated in the Metropolitan areas, mainly the two largest cities, Santo Domingo and Santiago, leaving other areas with limited access to finance.

Sponsor / Cost / Location

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

Development Impact

- Provide long-term financing on terms otherwise not available:
It would be difficult for FONDESA to raise capital from the domestic market due to its NGO status. The IFC transaction is thus expected to provide long-term funding with a tenor and of amount that is currently not available in the capital markets to this segment.

- Broadening Future Funding Source:
Although FONDESA is an A- rated FI by Fitch, its status as an unregulated, non-deposit taking financial institution limits its sources of long-term funding to credit lines and loans from multilateral organizations.

- Environmental and Social Issues
This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC''s Environmental and Social Review Procedure. FONDESA''s does not have any type of E&S management system. Because its portfolio consists mainly of microfinance, the E&S risks are low and can be managed by screening borrowers against the IFC''s Exclusion List and the E&S national laws. HR Policies and Procedures in place and appropriately conveyed to employees. Labor practices are consistent with national laws and IFC''s policies.

This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. FONDESA’s does not have any type of E&S management system. Because its portfolio consists mainly of microfinance, the E&S risks are low and can be managed by screening borrowers against the IFC’s Exclusion List and the E&S national laws. HR Policies and Procedures in place and appropriately conveyed to employees. Labor practices are consistent with national laws and IFC’s policies.

Contacts

For Inquiries About the Project, Contact

Mr. Quilvio Jorge
General Manager
FONDESA
Calle Restauración No. 127
Santiago, Dominican Republic

Telephone: +1-809-226-3333
Fax: +1-809-247-9544
Website: http://www.fondesa.org

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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