Biodiversity benefits thanks to additional BMZ funds
News from 2020-11-17 / KfW Development Bank
Since its establishment in 2014, the Eco Business Fund has been supporting - with BMZ funds - private, small and medium-sized enterprises in Latin America and the Caribbean (LAC) in the development of environmentally and climate-friendly business models. Now the Eco Business Fund Latin America has been increased by EUR 63 million. The BMZ funds are also intended to cushion the impact of the corona pandemic on companies.
The great diversity of biodiversity and natural resources existing in Latin America and the Caribbean is under increasing threat. Land use changes, water pollution and unsustainable forms of fishing and tourism continue to affect nature. To counteract this, it is important to promote the transformation of the economic system towards an environmentally conscious "green economy". The financial sector has an important role to play here, as the efficient and demand-driven provision of capital is necessary for the optimal implementation of green investments.
KfW Development Bank was one of the founders of the Eco Business Fund in 2014. As a structured impact investment fund, it uses public funds to break down market barriers and mobilize additional private capital for investments in resource-saving and more sustainable forms of production. The current fund volume amounts to USD 386.3 million and is supported by commercial banks, bilateral and multilateral institutions, governments and NGOs. KfW participates in the fund as a trustee with BMZ and EU funds as well as its own resources. The Fund's main financing instruments include medium and long-term credit lines for the 20 partner financial institutions that have been set up to date. These are on-lent in the form of green financial products to small and medium-sized enterprises (SMEs) for investment in climate-friendly forms of production. The focus of SME financing is on the agricultural sector in primary production, agricultural processing and fisheries / aquaculture. SME investments via the Eco Business Fund not only promote the conservation of biodiversity but also contribute to the sustainable use of natural resources.
With the funds provided by BMZ, also against the background of support for partners in the Corona pandemic, the BMZ trust participation was increased by EUR 62 million. The contract was signed in October and disbursement took place on November 16. The accompanying measure for technical support of the partners was also increased by EUR 1 million. This can be used, for example, to support SMEs in acquiring environmental certificates but also to reach new customers of the partner banks who want to redesign their production processes sustainably.
The increase in the fund in the current pandemic shows the special commitment of BMZ and KfW to SMEs in organic farming and sends a clear signal for the expansion of sustainable and environmentally friendly business activities even in times of Corona. In this way a fundamental contribution is being made towards the "green economy".