COFIDES will collaborate with Banco CODESARROLLO to strengthen the financial inclusion of Ecuadorian micro and small enterprises

March 26, 2024

Through a contribution under the Triple Inclusive Finance Programme (TIF) that reinforces a previous loan granted by FONPRODE.

COFIDES and Banco Desarrollo de los Pueblos Codesarrollo (Banco CODESARROLLO) have signed an agreement for the implementation of a technical assistance project that will provide support to Ecuadorian micro and small enterprises, especially in rural areas and the agricultural sector, within the framework of the Triple Inclusive Finance Programme (TIF).

The TIF Programme is the first blending project led by COFIDES in Latin America in collaboration with the European Union and the Spanish Agency for International Development Cooperation (AECID), through the Fund for the Promotion of Development (FONPRODE).

The agreement provides for a non-refundable contribution for a maximum amount of EUR 176,400, complementing the loan of EUR 7.0 million previously granted to Banco CODESARROLLO by the Spanish Cooperation through FONPRODE for the financial inclusion of Ecuadorian micro and small enterprises. The European Union is one of the funding partners of the TIF Programme, to which it contributes through the Latin America and Caribbean Investment Facility (LACIF).

This technical assistance project will strengthen CODESARROLLO Bank's socio-environmental management to better fulfil its institutional mission, improving financial performance and risk management. It is divided into three main components:

  • Financial deepening: The aim is to improve financial inclusion by reviewing and updating policies and microcredit methodology, using a socio-demographic scoring tool to reach the poorest population. This includes the automation of credit processes.
  • Green microfinance: It is planned to broaden and deepen the bank's climate and environmentally sustainable finance strategy. This involves assessing Banco CODESARROLLO's climate risks and vulnerabilities, developing internal policies and processes to promote environmentally responsible behaviour, and upgrading and/or developing green financial products.
  • Institutional strengthening: This component foresees improving credit risk management by automating the portfolio recovery process, adjusting collection processes and implementing a collection management software integrated into the core banking system.

Each component of the project aims to improve different aspects of banking, from financial inclusion to environmental management and collection efficiency.