Announcement of Colombia Continues Development of Small-, Medium-Scale Industries on July 12, 1984

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 84/115 Contalt Ciro Gamarra July 12, 1984 (202) 477-5320 COLOMBIA CONTINUES DEVELOPMENT OF SMAtL-, ,NDIUM-SCALE INDUSTRIES Colombia will further develop its small-scale industries by financing the development of new enterprises or the expansion of existing ones. The project will focus on enterprises outside the major metropolitan centers. It is expected to create up to 6,500 new jobs, and about 2,000 additional employment opportunities as well. The World Bank is supporting the project with a loan of $40 million. The Corporacion Financiera Popular (CFP) will provide some 1,600 small- and medium-size private industries with medium- and long-term credit over the next four years. The credit will supplement the limited financing currently available to these enterprises and allow CFP to double its lending to small-scale enterprises over the next four years. CFP is a public entity founded in 1967 to provide mediumn- and long-term financing to small businesses, primarily those engaged in manufacturing. The project is also aimed at providing technical assistance and introducing modern technology to CFP's main and regional offices. Assistance will be provided to CFP to carry out its own technical assistance program for Colombian enterprises. The businesses borrowing from CFP are expected to build new or improve existing industrial facilities, and acquire machinery, equipment, and spare parts. They will also obtain permanent working capital to build up stocks of raw materials and supplies to start or expand their productive capacity. This is the fourth project in support of Colombia's small industries to be assisted by The World Bank. The Bank's lending to the country for this purpose now totals $92.5 million. Colombia was the first country in Latin America to receive a World Bank loan for the development of small-scale industries. About 2,300 enterprises have been supported under the first three projects supported by The World Bank. These industries account for total investments of some $130 million. It is estimated that about 10,000 jobs have been created under these projects. The new project will cost $114 million. The enterprises involved will put up about $31 million as their own investment and CFP, about $5 million. The balance of the cost is expected to come from Colombian commercial banks and suppliers. The World Bank loan is for 17 years including four years' grace, with a variable interest rate, currently 9.89 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivalents.