Development banks from Mexico, Brazil, Colombia and Germany won the ALIDE 2018 Awards
Within the framework of the 48th General Assembly, ALIDE announced the winners of the ALIDE 2018 Awards in each of the contest categories. The acknowledged institutions are from Mexico, Brazil, Colombia and Germany.
The purpose of the ALIDE Awards is to identify and distinguish the best practices and innovations of programs, products and services implemented by the Development Banking. On this occasion, a new category, called Extraregional Banks, was included, and a total of 21 applications from 15 financial development institutions were received.
Category I: Financial Products
Banco Nacional de Obras y Servicios Públicos, S.N.C. (Banobras) of Mexico
Public Contracting Trust (FPC, for its Spanish acronym)
Given the need to reduce the financial costs of public debt for sub-sovereign governments (states, municipalities), Banobras developed a debt contracting scheme, through a public trust without structure, whose source of payment are the resources derived from the federal transfers that correspond to them. The trust serves as the accredited party instead of the sub-sovereign government. This structure allows the rating agencies to evaluate the payment source of the trust instead of the balance of the sub-sovereign Government, which allows them to obtain better financial conditions. The purpose is to promote a healthy sub-sovereign financing market and an adequate balance of risks which will be reflected in lower costs with interest rates based on the FPC’s rating levels. As a result of the FPC, there was a direct benefit for the State in the debt rating levels of the accredited parties, since it went, in the best scenario, from B- to AA+. A consequence of the improvement in the ratings was an improvement in the surtaxes obtained. For example, in the State of Veracruz, at the end of 2017, the weighted average surtax was 3.14%, and after the refinancing it dropped to 1.08%, which implies an estimated annual savings of USD 62.4 million.
Banco do Nordeste do Brasil S.A (BNB)
Programa Desenvolvimento Territorial (Prodeter)
It is a strategy of integral development of the territorial zones served by the bank. Through liaison committees, it tries to identify local needs of the regions and solve them with their credit products. The general and specific objectives are the following: a) The general objective is to contribute to territorial and local development through the organization, strengthening and increase in competitiveness of economic activities; b) Specific objectives: To strengthen the productive chains; incorporate technological innovations in productive activities; to bolster the participation of local economic agents; to promote integrated and targeted financing of productive activities; and to improve living conditions. The progress is satisfactory, with 21 localities served and 2 000 producers in close to 150 municipalities. The alliance among the bank, the municipalities, the councils and the producers works very well, and other banks have implemented these schemes with great success as well.
Category IV: ALIDE Green
Institute for the Development of Antioquia (IDEA) of Colombia
Strengthening the Local Economy and Low Carbon Growth
IDEA acts as a promoter of the country’s energy transition, through the creation of a financing line with which it was sought to improve the operation of the program “Strengthening the Local Economy and Low Carbon Growth”, fulfilling its objective of financing sustainable projects under schemes that allow correcting market failures, preserving the environment, and generating sustained income for the municipalities, since they are partners and owners of small hydropower plants. To date, the projects of non-conventional renewable generation that are in operation and under construction correspond to 5 small hydropower plants, whose total investment amount is USD 132 million, of which USD 88 million are financed by the IDEA, USD 21 million correspond to the capital contributions made by the public partner, in this case the IDEA; the remaining money is contributed by the private partners. In addition, the number of tons of CO2 prevented per year amount to 163 415; that is to say, an equivalent of 1.7 times the number of tons of CO2 per year are prevented with respect to the amounts of the projects financed between 2008 and 2015..
Category V: Extraregional Banks
Kreditanstalt Für Wiederaufbau (KFW) of Germany
The eco.business Fund promotes the financing of companies that adopt forms of production and sustainable technologies in the sectors of agriculture, forestry, fishing and tourism. Investments are channeled through local financial institutions to which the fund provides long-term debt solutions. In addition, it highlights its ability to provide technical assistance to financial intermediaries and their clients to facilitate the implementation of their products. The purpose is to achieve that in the medium term the local financial intermediaries decide to invest in the sustainable sector on the basis of purely commercial considerations, without relying on the support of the eco.business Fund. Since its creation, it has mobilized USD 213.5 million in capital, of which USD 38 million comes from the private sector. Currently, some of its investors are KfW, the German Government, the European Union, the United Kingdom, FMO, OeEB (Austrian Development Bank), Finance in Motion, Conservation International, Calvert Foundation, GLS Bank and ASN Bank. At the close of the first quarter of 2018, the Fund had already disbursed USD 170.4 million to 10 financial institutions in 6 countries, resulting in loans to more than 950 local companies.