MSMEs represent 95% of all private enterprises and provide jobs for up to 45% of the regional labour force and are, as such, an important driver of Central American economies and competitiveness.
In order to promote equitable and sustainable socio-economic development through the support of MSME, the EU collaborates with KfW and CABEI -through LAIF- to the implementation of a regional initiative, DINAMICA III. This initiative, amounting to a total investment of 71.720.000 euros, was preceded by two earlier phases DINAMICA I and DINAMICA II.
The DINAMICA III Initiative is therefore the continuation of a multi-country project promoting entrepreneurial and private sector development for employment and income generation in order to contribute to economic development and poverty reduction in Central America.
More specifically, the initiative aims to facilitate access to appropriate financing and technical assistance for newly founded, young and/or innovative MSME interested in green investments in order to start their operations and grow, along with support provided for innovative and/or green investments of MSMEs to qualify for loan financing.
This initiative is composed of three components:
- Seed Capital Risk Financing (to be financed by EU LACIF funds and CABEI funds, including the Dominican Republic)
- Technical Assistance to provide the following services:
- Capacity building: in the form of visibility and promotion of the Seed Capital Risk Financing, support for new enterprises/innovative MSMEs and for Participating Financial Intermediaries (PFIs) that provide financial services to MSMEs and want to promote innovation
- Regional Operator services: through a Regional Program Operator to implement the project. The Operator will assist the Regional Innovation Centre in the definition of the criteria to select the final beneficiaries, revising the decision-making process and involved actors, supporting the definition of the criteria for entrepreneurial success, evaluating the applications for seed capital contingency grants and selecting the beneficiaries. The Operator will also assist CABEI in transferring the funds to the final beneficiaries, monitoring and following-up their business plans as well as the success indicators of each entrepreneur.
- Support services through Entrepreneurial Development Centres (EDCs): These EDCs will support entrepreneurs in developing their proposal and business plan and provide coaching to those, who win the seed capital risk financing, throughout the initial phases of starting operations, consolidate and grow. The EDCs will also provide assistance to MSMEs on access to loans. Gender sensitivity will further be ensured through a dedicated component addressing the special needs of women in accessing loan finance.
- Loans for innovative and/or young) MSMEs
The Seed Capital Risk Financing component will enable the following:
- Additional financing for start-ups and for innovation, which is expected to lead to additional investments at MSME-level, with at least 580 job positions created, 30% of which for women.
- Better gender equality by financing specific activities, to increase the number of women entrepreneurs.