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IFC Helps Improve Access to Finance for Small Businesses in Bolivian Wood Sector


In Washington:
Paul Melton

Phone: +1 (202) 473-7349

Fax: +1 (202) 974-4384

Email:
pmelton@ifc.org

Adriana Gómez

Phone: +1 (202 )458-5204

Fax: +1 (202) 974-4384

Email:
agomez@ifc.org


LA PAZ/Washington,D.C., August 17, 2004—The Latin America and the Caribbean Small and Medium Enterprise Facility (LAC SME Facility), a regional technical assistance program of the International Finance Corporation, today launched a project in Santa Cruz de la Sierra, Bolivia, to broaden access to finance for small and medium enterprises (SMEs) in the country’s wood sector.

Representatives of over 20 small businesses in the wood sector attended the launch of the project, as well as the Prefect of Santa Cruz, the Bolivian forestry superintendency, and Alieto Guadagni and Veronica Querejazu - the Executive Director and Alternative Executive Director, respectively, of the World Bank Group representing Argentina, Bolivia, Chile, Paraguay, Peru, and Uruguay.


IFC, the private sector arm of the World Bank Group, has identified the wood sector as a priority for its technical assistance program in Bolivia. The country has 33.6 million hectares of forests – equal to nearly one third of its land area – and Bolivia is a leading world producer of tropical certified wood, with export receipts totaling more than $100 million in 2003. It has 1.4 million hectares of tropical forests certified by the Forest Stewardship Council -over 30% of the world's total – and the wood sector is also an important source of employment in Bolivia: around 950 small businesses are registered under the Bolivian Chamber of Forestry.


The findings of a recent comprehensive IFC study on Bolivia’s wood sector showed that the growth of potential of SMEs is hamstrung by weak access to local finance, owing largely to their weak financial organization and adverse credit risk perceptions of domestic banks and other financial institutions. IFC’s LAC SME Facility will therefore provide a few pre-selected SMEs with technical assistance during the pilot phase of the project to strengthen their levels of financial reporting and transparency.


Concurrently, IFC will partner work with local financial institutions to structure financing packages for small businesses that successfully complete the pilot project. The corporation will also provide technical assistance to improve the operational efficiency and performance of the small businesses so that they can attract more private investment inflows.


IFC is teaming up with Fundación Bolivia Exporta (FBE), established in September 1991 with support from the World Bank Group, to implement the project.  FBE helps open up new markets for Bolivian enterprises oriented towards external markets or import substitution. FBE will also manage funds that may be deployed as a preferential source of financing for small businesses involved in the project. IFC’s small and medium enterprises Capacity Building Facility will provide some of the financing for the project.


Atul Mehta, IFC Director for Latin America and the Caribbean, said, "IFC’s technical assistance will help strengthen the global competitiveness of Bolivian SMEs in the sector by improving the efficiency of their operations, making access to local finance easier.” He added, “By partnering with FBE, the LAC-SME Facility will help build capacity of key SME intermediary support services in Bolivia and enhance the long-term sustainability of this project."


Arturo Bowles, Director of the Bolivian Forestry Chamber, noted "Prior to launching this project, the Facility worked with the chamber to assess the long term growth potential of the wood sector and identify small and medium businesses that could be strengthened.  We look forward to continuing our collaboration with IFC through the implementation of the pilot."


The Latin America and Caribbean Small and Medium Enterprise Facility, headquartered in Lima, Peru, provides technical assistance for supporting the development of small and medium enterprises in Bolivia, Honduras, Nicaragua, and Perú, helping boost private sector wealth and job creation. Its areas of focus are to strengthen the global competitiveness of small businesses; make it easier for such firms to do business by simplifying the business regulatory environment; broaden access to finance for SMEs; and foster indigenous and socially responsible enterprises.

The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.