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Under our strategy of providing
financial services to spur private
sector development, over the years
the TaiwanICDF has assisted partner
countries in promoting relending
projects for micro, small and medium-
size enterprises (MSMEs). The aim
is to strengthen the functions and
operations of intermediary financial
institutions through fund injection,
making use of relending services to
help MSMEs access capital for their
development, thus achieving the goal
of developing the private sector.
At the end of the 1990s, the
TaiwanICDF began to work with
Central American multilateral
development banks to promote
relending projects to help local
financial institutions provide long-
term stable capital. Following our
successful experience with the
Special Fund model used in the
Central and Eastern Europe region
to implement a relending framework,
we t h e n b e g a n t o
discuss a new type of
cooperation structure
with the Multilateral
I n v e s t m e n t F u n d
(MIF), part of the Inter-
American Development
B a n k G r o u p ( I D B
Group), and, in 2006, an
agreement was officially
signed to implement
t h e S p e c i a l i z e d
Financial Intermediary
Development Fund (SFIDF).
Combining Different Channels
and Increasing Diversified
Financial Services
The TaiwanICDF’s SFIDF and the
Small Enterprise Investment Fund
(SEIF) under the MIF contributed
resources on equal basis to targeted
clients. Through equity investment,
loans and technical assistance, the
SFIDF is able to help local Central
American factoring companies
(accounts receivable financing),
finance companies and micro-
loan institutions strengthen their
institutional capacities, and support
the development of local MSMEs with
innovative financial products.
In the beginning of the SFIDF,
a mechanism for cross-border
remittance was developed in order
to respond to the needs of Central
Americans working in the United
States. This mechanism works as a
funding source, encouraging relatives
in the home country to apply for
mortgages or to use it
for repayment of micro-
loans, or increasing the
willingness of financial
institutions to provide
mortgages to migrant
wo r ke r s . I n recen t
years, for low-income
families and customers
in rural areas, the MIF
has combined other
financial products or
ICT tools so that local
financial institutions can provide
better financial services in line with
different loan conditions and needs.
For example, in El Salvador, the
MIF has transformed accounts
receivable into debt obligations
(certificate of obligatory claim)
through a local factoring company
to develop the factoring market for
small businesses. Also, by providing
technical assistance and loans,
the MIF strengthens the factoring
company’s management mechanism
and stabilizes its source of long-term
loans. In Nicaragua, the MIF uses
both equity investment and loan
to support a factoring company to
develop innovative financial products.
In Ecuador, the MIF focuses on
women customers, assisting a
bank to increase access for women
entrepreneurs to financial or savings
products.
By the end of 2015, resources
provided by the SFIDF have already
assisted over 10 financial institutions
in Nicaragua, El Salvador, Ecuador,
Bolivia, Mexico, etc. The above
examples of innovative financial
services for small businesses, we
believe, can bring inspiration and
benefits to the overall development of
the entire regional financial system for
small businesses.
74,136
Number of local micro,
small and medium-size
businesses supported
Specialized Financial Intermediary
Development Fund
3
Case Study