WASHINGTON, D.C., Sep. 12 -- The International Finance Corporation (IFC) has approved five loans totaling US$2.9 million to fund small and medium scale environmental projects. To date, financing has been provided for projects in Poland, Egypt, Papua New Guinea, and Costa Rica.
The loans are being made through the Small and Medium Scale Enterprise (SME) Program, a pilot initiative of IFC and the Global Environment Facility (GEF), created to stimulate greater involvement of small and medium scale enterprises in preserving biodiversity and reducing greenhouse gases. GEF has provided US$4.3 million to the program and IFC is the executing agency.
The program selects institutions to act as intermediaries, providing them with US$500,000 to US$1 million loans at long term, low interest rates. These loans are used by the intermediaries to finance small and medium scale enterprises whose projects demonstrate a positive environmental impact and have basic financial viability. The amount of financing, in either debt or equity, that the intermediaries can provide to a specific project may vary from US$20,000 up to a maximum of US$250,000. Examples of projects which will be financed include renewable energy power generation (small hydro, wind and solar photovoltaic systems), energy efficiency conversions to existing offices and factories, eco-tourism lodges, sustainable forestry, and harvesting of non-timber products from rainforests (nuts, oils, natural pharmaceuticals, etc.).
"Banks, venture capital companies, and nongovernmental organizations with a strong presence in developing countries and experience with small and medium scale enterprises are well positioned to channel funds to the environmental projects we would like to target," said Mr. Andreas Raczynski, Director of IFC's Technical & Environment Department. "These intermediaries are pioneering commercial funding of environmental projects that contribute to GEF's objectives of reducing greenhouse gases and preserving biodiversity."
The intermediaries selected by the SME Program to date are Environmental Enterprises Assistance Fund, a non-profit small business investment organization based in Arlington, Virginia; CARESBAC-Polska, a small business venture capital fund in Poland; FUNDECOR, a Costa Rican nongovernmental organization; El Sewedy Company, an Egyptian supplier of electrical equipment; and World Wildlife Fund Inc. Between them, these intermediaries have committed to financing at least 20 separate small projects that meet the SME Program objectives. The Program intends to select at least one additional intermediary during the current pilot phase to operate in Africa.
GEF is an international initiative of 156 participating governments jointly implemented by the United Nations Development Programme, the United Nations Environment Programme, and the World Bank. It was established to finance projects and other initiatives that address climate change, loss of biological diversity, international waters issues, and depletion of the ozone layer.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
