Announcement of Ecuador’s Small-Scale Enterprises to Use Forty Million Six Hundred Thousand Dollars World Bank Loan on December 20, 1982

lT.~<:GU:J JA'orld Bank 1818 H Street, N.W., Washington, O.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE 83/29 Contact: Ciro Gamarra December 20, 1982 (202) 477-8035 ECUADOR'S SMALL-SCALE ENTERPRISES TO USE $40.6 MILLION WORLD BANK LOAN The development of small-scale enterprises in Ecuado~ will be furth~r supported by a $40.6 million loan from the International Bank for Reconstruction and Development (!BRO). The most serious constraint traditionally faced by these enterprises has been the lack of adequate and timely credit. The loan represents the second Bank operation for the development of small-scale enterprises on a national level. These enterprises produce for.local use such consumer goods as clothing, furniture, footwear, small metal products, and final chemical products. Under a $20 million IBRO loan effective since 1981, 587 subloans a,veraging about $50,000 have been approved for eligible small-scale enterprises. Food and clothing enterprises, important users of local raw materials, account.for 38% of subborrowers. A loan discount facility, Fonda para Pequena Industria y Artesania ' :. (FOPINAR), was set up under the first project in the Corporacion Financiera Nacional (CFN)- The facility will continue managing the credit to be provided through financial intermediaries to small-scale enterprises. The average subloan is expected to be about $45,000. Corporacion Financiera Nacional will continue to administer a program of technical assistance to small-scale enterprises through FOPINAR. Support to small-scale enterprises will help generate employment, improve income distribution, and promote regional development. Approximately one half of the country's 35,000 to 40,000 small-scale enterprises are in rural areas. Eligible subborrowers from financial intermediaries will be private sector enterprises having fixed assets (excluding land and buildings) of no more than $350,000. Such firms usually employ a maximum of 30 persons and have little acces& to term financing from the banking system outside of the FOPINAR- operated system. The Corporacion Financiera Nacional has also been the beneficiary under all five !BRO-assisted projects (totalling $153.6 million) for the promotion of development finance companies in the country. Three of the five development banking projects are completed, having advanced policy reform, increased long- term financing to industry, and strengthened the CFN. • The IBRD loan of $40.6 million is for 17 years, including four years of grace, at an interest rate linked to the Bank's borrowing costs. The loan .., tft also carries an annual commitment charge of O. 7 5% on undisbursed balances and a front-end fee of 1.5% on the amount of the loan • NOTE: Money figures are expressed in U.S. dollar equivalent& •.