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Taiwan assists Paraguay in launching a credit guarantee mechanism dedicated to women, fueling momentum for a post-COVID women-led economic recovery
On September 28, 2022, the TaiwanICDF and Paraguay’s Development Finance Agency (Agencia Financiera de Desarrollo, AFD) signed a cooperation agreement for the creation of the Guarantee Fund for Women (FOGAMU), to assist Paraguay with economic recovery and women’s empowerment in the post-pandemic era. This cooperation agreement represents the first partnership between Taiwan and Paraguay in the area of financial services and credit enhancement and the signing was witnessed by the President of the Republic of Paraguay, Mr. Mario Abdo.
The outbreak of COVID-19 has severely impacted the liquidity of start-ups and micro, small and medium-sized enterprises (MSMEs), with women MSMEs hit especially hard. To support Taiwan’s allies in Latin America and the Caribbean in boosting the economy and maintaining social stability post-pandemic, the TaiwanICDF launched a regional program focusing on the economic empowerment of women, which takes a holistic approach that integrates technical assistance, vocational training and financial assistance to provide comprehensive support for women. As an important part of the program, a credit enhancement scheme dedicated to women in Paraguay and branded as the Guarantee Fund for Women (Fondo de Garantía para la Mujer, FOGAMU) will be established by FOGAPY (Fondo de Garantía del Paraguay), a fund administered by AFD, with funding support from Taiwan. Through the credit enhancement provided by FOGAMU, a network of more than 20 financial institutions will benefit and therefore be incentivized to lend to women MSMEs.
“With the Paraguayan government's great support and the AFD’s outstanding capabilities and professional expertise, FOGAMU will make a positive impact on women MSMEs and increase women’s participation in economic activities, to build a more inclusive and resilient society," said Amb. Timothy Hsiang, Secretary General of the TaiwanICDF at the signing ceremony.
“FOGAMU is an instrument that we developed in just 7 months and that was possible thanks to the joint work of the Government of the Republic of China (Taiwan) and the Ministry of Industry and Commerce,” said Teresa Rivarola de Velilla, President of the AFD. “After having been in the private sector and civil society for many years, I feel very honored to have been part of the construction of this instrument that all Paraguayans have today. I am convinced that this guarantee scheme will provide a solution for the 70% of women who today do not have access to credit for their businesses.”
According to the World Bank, formal SMEs contribute up to 40% of national income (GDP) in emerging economies and these numbers are significantly higher when informal SMEs are included. This demonstrates that SMEs play a vital role in creating employment opportunities and underpinning economic development.
Likewise, in Paraguay, it is estimated that the amount of MSMEs in the country exceeds 250,000, accounting for about 97% of the total number of enterprises and 65% of the total labor force, evidence that MSMEs are also an important driving force for Paraguay’s economic development. However, MSMEs usually face more barriers to accessing loans from financial institutions, and this situation is even more challenging for women MSMEs due to insufficient collateral. Through this cooperation, the TaiwanICDF and the AFD will together assist women MSMEs who lack funds and securities to increase their access to credit.
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- Update: 2022/09/29
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