IDB and Google partner to strengthen small businesses in Latin America and the Caribbean

The current COVID-19 crisis poses an unprecedented challenge to the continuity of microfinance institutions (MFIs), especially small- and medium-sized ones, in a context where financial services are needed more than ever for small businesses. As the effects of the COVID-19 crisis impact the economy of the Latin American and Caribbean (LAC) region, small and medium microfinance institutions face serious liquidity problems and currency mismatches as their loan portfolio quality deteriorates, their funding sources dry up, and volatile currencies enhance their foreign exchange (FX) risks.

To ensure that microfinance institutions can continue to provide essential financial products and services in the short term, but also to accelerate the post-COVID-19 economic recovery process in Latin America and the Caribbean, Google is supporting Locfund Next—the first permanent regional vehicle, managed by local managers, dedicated to providing financing in local currency and supporting digital transformation to MFIs. The $8 million in funding from Google, provided through the Inter-American Development Bank’s innovation lab IDB Lab, complements $4.5 million provided by IDB Lab.

Small businesses are the backbone of the global economy. We're committed to support small businesses around the world through a $75M investment fund in partnership with @kiva, @eif_eu, @the_idb and @ogenisrael. https://t.co/wOYN6vRwlM

— Google (@Google) February 17, 2021

This initiative is being launched as part of an announcement made by Sundar Pichai, CEO of Google, on the creation of a $200 million fund that seeks to support non-governmental organizations (NGOs) and financial institutions around the world to strengthen their access to credit initiatives for SMEs. It is the only initiative of its kind for the LAC region.

“We are enormously proud to have been selected by Google to manage its economic recovery resources in the face of the pandemic,” said Irene Arias, CEO of the IDB Lab. “This joint investment will allow IDB Lab to accelerate its work in financial inclusion by creating permanent solutions that facilitate access to financing and support the digitization of financial intermediaries. “

Examples of this historic partnership between Google and the IDB include: ConnectAmericas, an initiative that helps SMEs strengthen their businesses by providing them access to clients, suppliers, and investors in the region and around the world; an IT certification program to enhance employment opportunities for vulnerable young people in Brazil and Panama, with a focus on women, thereby creating a sustainable and inclusive model for training and labor force insertion; and FAIr LAC, an alliance between the public sector, private sector, and civil society which strives to influence public policy and the entrepreneurial ecosystem, with the ultimate goal of promoting the responsible and ethical use of artificial intelligence.