In the first initiative of its kind in Central America, the USAID Transforming Market Systems Activity, implemented by ACDI/VOCA in Honduras, is partnering with the International Finance Corporation (IFC) and the Latin American Financial Services (LAFISE) Group to support small- and medium-sized enterprises (SMEs). Its goal is to ensure the financial sustainability of SMEs in the face of the ongoing COVID-19 pandemic.
The initiative will expand access to finance for SMEs, especially women-led businesses, by following the global best practices implemented by the IFC, a member organization of the World Bank Group that supports the private sector of emerging markets.
The initiative will also strengthen the portfolio of the LAFISE Group, which is made up of companies from multiple sectors, including banking and finance, insurance, tax warehouses, investment banking, and more. The LAFISE Group will adjust its business and risk management model and develop a value proposition to reduce financial and non-financial barriers.
“We are proud to be the first financial group in the region to lead this initiative . . . and doing so with IFC and USAID ensures complete success. . . . COVID-19 has hit many sectors and especially [SMEs], so, through this initiative, we seek to make available to our customers business models that add value to their management and that allow optimal financial conditions.”— Rodrigo Zamora Terán, executive director of LAFISE Group
Meanwhile, the Activity will work directly with women entrepreneurs to help them boost their investments, develop innovative business ideas, and generate more jobs. The Activity is a five-year program that collaborates with the Honduran government and public and private sectors to address the root causes of migration out of the country, while exploring pathways for a more prosperous, secure, and inclusive Honduras. By growing demand for products and creating jobs and self-employment among participants, the Activity aims to create transformational change in local economies.
This latest initiative is long-overdue in Central America, where the need for SME credit is $26 billion, the funding gap is $3 billion, and there are 130,000 registered SMEs, of which 35 percent are owned by women who struggle disproportionately to access financing. The initiative will have a special focus in Honduras, where the Activity operates.
“While SMEs represents a business opportunity for financial institutions, this remains a little-explored market in Central America because it is considered risky. And this leads to SMEs having difficulty finding the financing they need to grow. From IFC, we are supporting the LAFISE Group in the region so that they can have a greater understanding of the market, specific products and services, and integrating women entrepreneur into their model.”— Sanaa Abouzaid, IFC manager for Central America
To strengthen the internal capacity of the LAFISE Group in Central America, the partners will work together to review the strategy, value offering, service delivery channels, and more. They will also identify business opportunities within the SME segment, narrowing their focus to women-led businesses, to address the challenges they face during the pandemic.
Learn more about the USAID Transforming Market Systems Activity.
Learn more about our work in Honduras.