? IFC is investing up to $250 million in Banco Santander to expand access to finance in Brazil and support micro, small and medium enterprises (MSMEs) in the North and Northeast Regions.
This will help close Brazil's social financing gap and bolster a more inclusive economic growth.
IFC's financing to Banco Santander is structured as a Social Bond as the utilization of the proceeds of the bond will be used to provide positive social outcomes such as employment generation and financial inclusion. Out of IFC's $250 million total financing, $150 million will be allocated to improve access to finance for small and medium enterprises in underserved regions of Brazil and $100 million to microentrepreneurs across the country, contributing to foster their role in the creation of a dynamic, competitive, and inclusive economy. This is IFC's first social bond subscription in US-dollars in Brazil.
Key to Brazil's economy, MSMEs account for approximately 54 percent of Brazil's employment. Yet they continue to face significant hurdles in accessing finance. The finance gap for MSMEs is $483 billion, as estimated by IFC's SME Finance Forum. The situation is exacerbated in areas with greater economic inequality, such as the North and Northeast Regions. Despite representing 6 percent and 14 percent of the country's GDP respectively, these regions only receive 3.3 percent and 12.5 percent of the country's commercial credits.
'We hope that IFC's investment in Banco Santander will encourage other financial institutions to promote a more inclusive environment,' said Vittorio Di Bello, IFC Director, Financial Institutions Group. 'Fostering the Brazilian entrepreneurship sector will highly contribute to the country's sustainable growth,' he adds.
According to Gabriela Bertol, Head of Sustainability at Santander Brasil, this first Social Bond by Santander in the country is part of the Group's global sustainable finance strategy: 'by supporting SMEs located in the North and Northeast Regions and microcredit, we are contributing to the development of people and businesses in the areas that most need support', she stated.
IFC and Banco Santander have been working together in Brazil to advance climate and inclusion agendas in the country. In 2022, in the midst of the COVID-19 pandemic, IFC invested $150 million in Banco Santander to expand access to finance for doctors and healthcare MSMEs for working capital and purchase of medical equipment.
About IFC
IFC - a member of the World Bank - is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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