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Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
FONDO PARA EL DESARROLLO, INC. - FONDESA
Microfinance and Small Business - Non Commercial Banking
Date SPI disclosed
September 7, 2011
Projected board date
October 10, 2011
Invested: November 30, 2012
Signed: April 23, 2012
Approved: December 12, 2011
The proposed investment (the “Project”) consists of a local currency loan of approximately DOP 190 million (up to $5 million equivalent) for Fondo para el Desarrollo, Inc. (FONDESA or the “Company”). With an average loan size of approximately $1,000, FONDESA is an NGO focused on providing financial services to micro entrepreneurs, low and middle income segments and rural populations in frontier regions and small provinces across the north and northwest of the Dominican Republic, where commercial banks have limited presence. The Dominican Republic still has a very unequal distribution of financial services: 76% of the financial system resources are concentrated in the Metropolitan areas, mainly the two largest cities, Santo Domingo and Santiago, leaving other areas with limited access to finance.
Project sponsor and major shareholders of project company
FONDESA, as an NGO, has no shareholders; however, it is controlled by the Asociación para el Desarrollo - APEDI, which is also an NGO, established in 1961 with the objective of promoting the economic and social development of the Dominican Republic. APEDI has a long track record of creating several institutions that promote progress and development.
Total project cost and amount and nature of IFC's investment
The Project is estimated at around $5 million composed of a 5-year senior loan in local currency.
IFC investment as approved by Board
5 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
FONDESA is headquartered in Santiago, the second largest city in the Dominican Republic, with operations in 16 regions of the country through 36 branches. FONDESA is expected to provide micro loans in the regions where these branches are located and, furthermore, expand its microfinance operations to other municipalities.
Anticipated development impact of the project
The Project is expected to:
-Enhance FONDESA's ability to support productive micro entrepreneurs and low income borrowers who will, in turn, stimulate growth, employment generation and poverty reduction.
- Strengthen micro finance services in the Dominican Republic, covering a number of provinces across the country and outside urban areas with low banking penetration.
IFC's expected development contribution
- Provide long-term financing on terms otherwise not available:
It would be difficult for FONDESA to raise capital from the domestic market due to its NGO status. The IFC transaction is thus expected to provide long-term funding with a tenor and of amount that is currently not available in the capital markets to this segment.
- Broadening Future Funding Source:
Although FONDESA is an A- rated FI by Fitch, its status as an unregulated, non-deposit taking financial institution limits its sources of long-term funding to credit lines and loans from multilateral organizations.
- Environmental and Social Issues
This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC's Environmental and Social Review Procedure. FONDESA's does not have any type of E&S management system. Because its portfolio consists mainly of microfinance, the E&S risks are low and can be managed by screening borrowers against the IFC's Exclusion List and the E&S national laws. HR Policies and Procedures in place and appropriately conveyed to employees. Labor practices are consistent with national laws and IFC's policies.
Environmental and social issues - Category FI
This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. FONDESA’s does not have any type of E&S management system. Because its portfolio consists mainly of microfinance, the E&S risks are low and can be managed by screening borrowers against the IFC’s Exclusion List and the E&S national laws. HR Policies and Procedures in place and appropriately conveyed to employees. Labor practices are consistent with national laws and IFC’s policies.
For inquiries about the project, contact:
Mr. Quilvio Jorge
Calle Restauración No. 127
Santiago, Dominican Republic
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433