Climate-Smart, Inclusive Finance for Latin America's Small Businesses and Farmers

Financial inclusion remains a distant goal for many in Latin America, particularly smallholder farmers and microenterprises. Microfinance institutions serving the informal sector and MSMEs face persistent challenges in expanding their reach - from limited understanding of agriculture-specific and seasonal financing needs to weak risk management tools that make it difficult to deepen financial services and promote climate-smart activities. 

Objectives

Finance that works for people and the planet 

The TIF Programme is built on a three-pillar framework:  financial, social and environmental, known as the Triple Bottom Line, with a twofold objective: making financial services more inclusive by reaching those at the bottom of the pyramid, and promoting climate-smart finance. TIF brings together the tools, actors and financing needed to improve access to finance for low-income populations while reducing climate risk and vulnerability, particularly for smallholder farmers. It works to reduce climate risk in the lending portfolios of financial service providers and scale up climate-smart lending to urban and rural micro, small and medium enterprises with no or limited access to the formal financial sector, including smallholder farmers. 

Project activities

TIF provides support to financial service providers serving MSMEs through long-term loans via its Debt Facility, and customised technical assistance through its Technical Assistance Fund. This technical assistance is central to maximising the impact of financing available to implementing partners, enabling targeted support across all three areas of intervention. 

(Expected) Results

TIF is expected to: 

• Expand the scale and depth of MSME financing, reaching more businesses and going further down the pyramid
• Advance environmental risk mitigation and the uptake of climate-smart practices, particularly in agriculture
• Build the capacities needed to ensure the long-term sustainability of the action
• Provide at least €53,000,000 in new financing to financial intermediaries and at least 30,000 loans to smallholder farmers and MSMEs 

Implementing partners

Compañía Española de Financiación del Desarrollo (COFIDES) 

Spanish Agency for International Development Cooperation (AECID)