Regional development banks allocate more resources for financing needs

 

Two of the region’s development banks have announced increased funding for projects in both Latin America and the Caribbean (LAC).

 

They are: Inter-American Development Bank (IDB) and Caribbean Development Bank (CDB). 

 

The more recent update came from the Caribbean Development Bank, which approved US$232,000 in grant funding to strengthen the capacity of development finance institutions (DFIs) across its borrowing member countries. This allocation should increase the pool of funds accessible to finance small and medium-sized enterprises (SMEs), climate resilience, renewable energy, and sustainable development.

 

Approved by the CDB’s board of directors under the Special Development Fund (SDF) 11 programme, the initiative comes with a technical assistance component that will support the delivery of four specialised training programmes and the deployment of a web-based SME credit scoring and risk-rating platform to participating DFIs throughout the Caribbean.

 

“Lending capital alone is not enough to transform economies,” explained Dr Isaac Solomon, CDB’s vice-president of operations. 

 

“Strong institutions are essential to ensuring that finance reaches the businesses and sectors that will have the greatest development impact. This initiative will equip development finance institutions with the technical expertise and digital tools needed to strengthen lending decisions, support innovation, and expand financing for enterprises that contribute to resilient and inclusive growth across the Caribbean.”

 

The project forms part of CDB’s commitment to building stronger financial institutions capable of driving private sector development and increasing access to finance for businesses that are critical to economic growth and resilience.

 

DFIs in borrowing member countries will receive training in SME credit risk management; specialised sector financing for agriculture and renewable energy; Environmental, Social and Governance (ESG) standards and compliance; and climate and sustainability finance instruments. As part of the programme, participating institutions will have access to the SME eSMART digital credit assessment platform, enabling more efficient and consistent evaluation of SME loan applications.

 

The banks will partner with Caribbean Information and Credit Rating Services Limited (CariCRIS) to deliver the programme, leveraging regional expertise and internationally recognised training providers to deliver practical, Caribbean-focused learning.

 

While underscoring the DFIs’ role in addressing financing gaps faced by SMEs, particularly in underserved sectors overlooked by commercial lenders, the CDB said the initiative responds to identified capacity needs across the regional DFI network. The programme should strengthen each institution’s ability to assess credit risk, structure financing for climate and renewable energy investments, integrate ESG considerations into lending, and mobilise finance for sustainable development.

 

“The Caribbean’s economic transformation will be driven by entrepreneurs, but enabled by strong institutions,” stated Lisa Harding, division chief, Private Sector, CDB. 

 

“Development finance institutions play a pivotal role in unlocking investment for businesses that generate jobs, foster innovation, and build resilience. By strengthening their capacity, CDB is helping to create a more dynamic, inclusive, and sustainable private sector across the region.”

 

IDB supports critical-mineral value chains and resilient infrastructure

The Inter-American Development Bank is also ramping up its financial support of projects across Latin America and the Caribbean, particularly in the areas of in critical-mineral value chains and resilient infrastructure.

 

In early July, the bank’s president, Ilan Goldfajn, signed a US$200-million guarantee agreement with the Government of Canada to support up to US$1 billion in new financing for projects. Canada’s Secretary of State (International Development) Randeep Sarai represented his country.

 

Signed in Guatemala City, the agreement enables the IDB to expand its lending capacity while preserving its financial strength and strong credit-risk rating. 

 

The guarantee will bolster IDB LAC Minerals, a regional initiative to strengthen value chains in critical minerals, to support projects that expand processing capacity and develop the infrastructure needed to add value to the supply chain through responsible mining. It will also help Latin America and the Caribbean players to connect with global markets. 

 

In addition, the guarantee will support investments in resilient transport, energy, water, and digital infrastructure that keep essential services operating during shocks, in keeping with the IDB Group’s Ready and Resilient Americas initiative. This should help countries prepare for and recover from natural disasters.

 

“By using our balance sheet more effectively, we can deliver more for our member countries. Canada is a valued and long-standing partner, and this agreement reflects our shared commitment to growth across the region,” Goldfajn stated.

 

“Canada and IDB have been steadfast partners for over six decades,” said Sarai. 

 

“Today, we are reinforcing that partnership by jointly signing a guarantee agreement to unlock sustainable development across Latin America and the Caribbean. Together, we are investing in the future of the region by supporting economic growth through strengthening critical minerals value chains and building climate-resilient infrastructure to help secure a more stable and prosperous world.’’ 

- JS