On May 1, the Japan International Cooperation Agency (JICA) signed a loan agreement with Banco Cooperativo Sicredi S.A. (Banco Sicredi), a Brazilian financial institution, for up to US$100 million to support the agricultural sector. This project was mentioned in the “Joint Statement on Further Strengthening the Strategic Global Partnership between Japan and Brazil” released after the Japan-Brazil Summit Meeting on May 3, 2010, which welcomed the signing of the agreement. Agriculture is a major industry, accounting for approximately 27% of Brazil’s GDP (as of 2020). Brazil is the world’s largest exporter of sugar, coffee, soybeans, corn, and meat, and the promotion of the agricultural sector is important not only for the country’s economic development but also for global food security. However, access to finance for farmers, especially small-scale farmers, is limited, and their inability to make capital investments hinders productivity growth. Sicredi System member farmers
Improving access to finance for small and micro enterprises is also a major challenge for Brazil. Although SMEs account for 98.5% of the number of enterprises, approximately 27% of GDP, and support 54.5% of formal employment, the financing gap for SMEs has reached approximately $626 billion, or 35% of the country’s GDP, which is not enough to meet the country’s financing needs.
The Sicredi System (Sistema de Crédito Cooperativo), which includes Sicredi Bank, the lender for this project, is the oldest credit union group in Latin America and one of the largest in Brazil, originating from a credit union founded in 1902. The system has 105 credit unions and approximately 2,600 offices in all 27 states of the country, providing financial services mainly to its member farmers and small and micro businesses.
Sicredi System will use US$70 million of the US$100 million project financing to provide loans to the Brazilian agricultural sector. The remaining US$30 million will be used to finance micro, small, and medium enterprises (MSMEs), of which US$15 million will be used to finance MSMEs in the relatively less developed northern and northeastern regions of the country.
This project will contribute to the sustainable economic development of the country by improving access to finance for the Brazilian agricultural sector and small and micro businesses, and will contribute to SDG Goals 1 (End Poverty), 2 (Zero Hunger), 8 (Both Job Satisfaction and Economic Growth), 9 (Create a Foundation for Industry and Innovation), and 17 (Let’s Achieve the Goals in Partnership). Partnerships to Achieve the Goals).
The project is the first co-financing with the Latin American Development Bank (Corporación Andino de Fomento), which has signed a loan agreement with a ceiling of US$50 million.
This project is an adaptation of the Facility for Accelerating Financial Inclusion (FAFI) and the Facility for Supporting Agricultural supply chain JICA will continue to support access to finance for the agricultural sector and small and medium-sized enterprises (SMEs) in Brazil and other countries around the world.
© Source JICA
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