eco.business Fund supports Peruvian small-scale farmers with a USD 20 million loan

eco.business Fund, advised by Finance in Motion, has announced it is extending a USD 20 million loan equivalent in local currency to Caja Arequipa, a Peruvian financial institution that lends to low-income individuals in rural provinces where agribusinesses have a significant environmental and social impact. The loan is part of a USD 50 million loan equivalent in local currency to Caja Arequipa structured by IDB Invest, the private sector arm of the IDB Group.

Caja Arequipa is a microfinance institution with a 37-year track record. It has a broad reach across Peru and primarily focuses on lending to micro and small agricultural businesses. Caja Arequipa is the only Peruvian financial institution of its kind to measure its CO2 emissions. It actively participates in various sustainability frameworks, including the Global Alliance for Banking Values and the Global Reporting Initiative.

Agriculture employs more than a third of Peruvians living in rural areas, and the sector has experienced impressive recent growth, contributing to a steady decline in levels of rural poverty. Nevertheless, many small-scale farmers still need support to obtain affordable credit. Currently, 60% of formal micro-, small- and medium enterprises (MSMEs) in Peru are led by women, and 70% of informal MSMEs have women in charge.

The transaction marks another milestone in eco.business Fund’s strategy of promoting financial inclusion and fostering sustainable practices among small-scale farmers in Latin America. Additionally, it demonstrates its commitment to delivery, client service, and flexibility. Finally, this transaction will be the first syndication the fund participated in that involves a local currency synthetic structure.

Through this investment, the fund is expected to contribute to Sustainable Development Goals (SDGs) 2 (zero hunger), 8 (decent work and economic growth), 15 (life on land), and 17 (partnerships for the goals).

In addition to the loan, Caja Arequipa will receive technical assistance from eco.business Fund's Development Facility. This will include training commercial staff to identify and mitigate environmental and social risks within their portfolio. It will also include providing additional training to Caja Arequipa’s staff through the fund’s Sustainability Academy. This will build capacity and increase sustainable farming know-how among the employees at the institution and its clients.

eco.business Fund chairperson Michael Evers said: “Peru is a strategic country from a diversification perspective and has a vibrant agribusiness sector. This loan aligns well with our mission to promote sustainable use of natural resources, address climate change, and reach the previously unbanked in Peru, especially female entrepreneurs in the agribusiness sector.”

Hector Gomez Ang, Regional Head – Latin America and the Caribbean at Finance in Motion, eco.business Fund’s advisor added: “With this loan, the fund aims to accelerate the adoption of sustainable practices by smallholder producers in Peru, promoting biodiversity conservation, and the sustainable use of natural resources.” (...)

An impact investment fund advised by Finance in Motion, the eco.business Fund was initiated by Germany’s KfW Development Bank and Conservation International with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ).

The sub-fund for Latin America and the Caribbean has received funding from the European Commission as well as from numerous other prestigious development finance institutions and institutional investors.