MICROCAPITAL BRIEF: ANDE, IDB to Implement MSME Digital Transformation Program in Uruguay, Boosting Digital, Human Resources
The Inter-American Development Bank (IDB), a multilateral finance institution that promotes economic development in Latin America and the Caribbean, recently approved a loan of USD 15 million to support micro-, small and medium-sized enterprises (MSMEs) in Uruguay through the MSME Digital Transformation Program. The goal is to increase MSMEs’ adoption and awareness of “digital solutions, increase the supply of digital goods and services, and strengthen the offer of digital talent creation services” by “generating the necessary skills to be able to adopt and use new technologies effectively.” The loan, is being channeled through Agencia Nacional de Desarrollo (ANDE), an agency of the government of Uruguay, has a term of 25 years, a grace period of 5.5 years and an interest rate based on the London Inter-bank Offered Rate (LIBOR).
ANDE president Carmen Sánchez stated, “International evidence shows that the adoption of digital technologies allows improving business performance in terms of sales, jobs and productivity. For example, by managing additional sales channels, forecasting and anticipating customer needs, automating management processes, speeding up and making innovation processes cheaper. However, these transformations that Uruguayan MSMEs require do not occur spontaneously, due to many limitations, so from public policy we must create the conditions and incentives for this to occur. That’s what this program is about.”
The goal of ANDE is to promote economic development by supporting MSMEs with funding, mentoring and technical assistance. For 2020, ANDE reported USD 30 million in disbursements to MSMEs, of which two thirds was to be repaid to the agency.
Established in 1959, IDB promotes “environmentally friendly” economic development via improved health, education and infrastructure in Latin America and the Caribbean. During 2020, IDB reports having issued USD 14 billion in loans and grants, ending the year with assets of USD 152 billion. The institution is headquartered in the US city of Washington.
The IDB Group comprises IDB; the Inter-American Investment Corporation, which uses the trade name IDB Invest; and the Multilateral Investment Fund, which uses the trade name IDB Lab. IDB Invest is active in agriculture, financial inclusion, sustainable energy and transportation. As of June 2020, it had USD 13 billion in assets under management, deployed via 385 clients in 25 countries. Established in 1993, IDB Lab is an “innovation lab” that tests models for facilitating inclusive growth. During the third quarter of 2020, IDB Lab approved 16 projects with a total value of USD 9.5 million.
By Harriet Ritchie, Research Associate