MSMEs: an engine to overcome the COVID-19 crisis in Latin America
The health crisis and the containment measures adopted by the authorities as a mechanism for preventing and containing the COVID-19 pandemic in Latin America have had a significant impact on micro, small and medium-sized enterprises (MSMEs), which play a fundamental role in protecting formal employment and economic and social recovery, since they represent 99% of the formal business fabric and employ over 60% of the region's workforce.
On the Day of Micro, Small and Medium Enterprises (MSMEs), celebrated on June 27, CAF highlights the importance of promoting productivity and competitiveness to boost recovery and long-term sustainability through internationalization, productive integration in chains and clusters and a lot of innovation. In addition, it reiterates its support at this juncture through a regional counter-cyclical support facility for local development banks due to the effects of the COVID-19 with the provision of financial resources of up to USD 1.6 billion and non-financial resources, to support the efforts of the governments of the region to promote productive recovery through MSMEs.
"In 2019 we contribute to increasing the productivity of 23,213 SMEs and we expect a greater effect through liquidity lines and other facilities to local development banks and commercial banks that add to the strategy of having more productive and competitive SMEs, emphasizing internationalization, innovation and productive integration, as well as the incorporation of socially and environmentally sustainable practices," said Luis Carranza Ugarte, CEO of CAF.
The promotion of productivity and competitiveness of MSMEs in Latin America is materialized by supporting countries in their strategies and public policies for this sector; developing capacity building activities; providing financial and non-financial resources to microfinance institutions; channeling institutional investment resources with shared risk models to support MSMEs; and supporting startups that develop innovative solutions in processes, products and business models, adapted to the new reality.
CAF supports the region in an agile and opportune way to overcome the COVID-19 through a series of financial and technical instruments that complement the measures that governments are implementing. The comprehensive strategy includes a regional emergency credit line of USD 2.5 billion to strengthen countercyclical economic measures, in addition to a USD 50 million credit line per country to address the health emergency, non-reimbursable resources of USD 400,000 per country; knowledge generation and virtual training, among others.
