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Source: Inter-American Development Bank

Peru will boost competitiveness and economic recovery to improve the business environment as well as investment and innovation of micro and small enterprises (MSEs) with a $400 million loan approved by the Inter-American Development Bank (IDB).

The program aims to promote the formalization and digitalization of MSEs and increase their access to financing to uphold the continuity of private production and investment. In addition, public programs for innovation will be aligned with the country’s productive challenges and with the development of a venture-capital-oriented private industry.

The current operation –the first of two operations under the Programmatic Policy-Based Loan modality– aims to close the digital technology usage and gender gaps.

These gaps don’t differ much by geographical region or users’ age, but they do tend to shrink as the level of informal workers’ education improves. In this sense, flexible, easy to access training sessions capable of producing short-term results, such as bootcamps, can be the ideal tools to support the country’s current needs.    

Peru’s economy is characterized by a high degree of productive duality – microenterprises’ productivity is 3 percent that of large corporations, whereas the ratio for small and mid-sized enterprises is 59.1 percent. These gaps are reflected in the pronounced vulnerability displayed by MSEs during the pandemic. Additionally, the country has a high level of business informality, reaching 1.5 million enterprises, or 40 percent of total companies, accounting for 18 percent of GDP. This elevated degree of informality blocks MSEs’ access to markets and to the public resources they need to develop themselves.      

The program’s beneficiaries will be formal MSEs with access to economic recovery programs, early-stage risk-capital investment funds, and those entrepreneurs receiving investments from such funds. Formal companies involved in public programs for mission-oriented R&D, as well as MSEs participating in the corporate digitalization program will also benefit.

The $400 million IDB credit is of a contingent nature and has an amortization term of up to 20 years and an interest rate based on LIBOR.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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