The inter american investment corporation is an important multilateral development bank that provides financing to small and medium enterprises (SMEs) in Latin America and the Caribbean. As a member of the Inter-American Development Bank (IDB) Group, the inter american investment corporation plays a key role in promoting economic development in the region by supporting private sector companies. With over $12 billion in assets, the inter american investment corporation has invested in hundreds of enterprises across sectors like agribusiness, manufacturing, services, infrastructure and technology. By mobilizing capital, knowledge and connections, the inter american investment corporation enables these companies to generate profits, create quality jobs, pay taxes and contribute to the economic growth of their countries. Understanding the functions and operations of the inter american investment corporation provides valuable insights into development finance and impact investing in Latin America. This article will examine the history, organizational structure, financing products and development impact of the inter american investment corporation.
The inter american investment corporation was established in 1986 to support private enterprise
The inter american investment corporation (IIC) began operations in 1989 as an independent organization within the IDB Group. It was established to fulfill the mandate of supporting the development of small and medium private enterprises in Latin America and the Caribbean. With financing needs underserved by commercial banks, the IIC was created to provide SMEs with medium and long-term financing. The idea was that by supporting the growth of SMEs, the IIC could have a powerful effect on job creation, innovation, and inclusive economic growth in the region. The member countries include all 48 countries that are shareholders of the IDB. The headquarters of the IIC is in Washington, D.C. with offices across the region.
The inter american investment corporation provides loans, equity investments and guarantees
The IIC offers three main types of financing: loans, equity investments and guarantees.
Loans are a key product, accounting for over half of approvals. Loan sizes range from $2 million to $20 million, with maturities between 5 to 15 years. Interest rates are set on market terms based on the project risk profile. IIC loans have funded projects in all sectors, from farms to manufacturers to infrastructure developers.
Equity investments allow the IIC to purchase stock in companies seeking growth capital. The IIC takes minority stakes, typically investing $2-10 million for a 10-20% ownership interest. IIC also provides quasi-equity financing through convertible debt and subordinated loans.
Guarantees help companies obtain financing by reducing risks for commercial banks. The IIC guarantees cover risks like debt service default, allowing companies to access loans at better terms. Over $500 million in IIC guarantees have mobilized $2.5 billion in lending.
By offering this flexible mix of products, the IIC is able to meet the diverse needs of SMEs across Latin America.
The inter american investment corporation focuses on impact alongside financial returns
In providing financing, the IIC aims to generate both financial returns and positive development impact. Some of the key impact objectives include:
– Job creation – The IIC tracks direct and indirect jobs created and saved by its clients. Over 1.4 million jobs have been generated by IIC-supported companies.
– Gender equality – At least 30% of IIC approvals must support women as business owners, leaders or employees.
– Climate action – The IIC aims to provide at least 30% of financing to climate-friendly projects aligned with the Paris Agreement.
– Increased productivity – Financing advanced technologies and management practices to improve SME operational efficiency.
– Tax revenues – By supporting profitable SME growth, the IIC enables increased tax payments to support government programs.
The focus on impact is what sets the IIC apart from purely commercial financing sources. The goal is to demonstrate that positive financial and social returns can be mutually reinforcing.
The inter american investment corporation has mobilized over $12 billion to date
Since 1989, the IIC has deployed billions in development financing across Latin America and the Caribbean:
– $12.6 billion in total approvals
– 1,004 companies supported
– Operations in 26 countries
– 56% of projects were in the manufacturing, agribusiness and services sector.
– Average IIC loan or equity investment was $8.5 million
– Additional $5.8 billion mobilized from partner institutions
Some landmark projects supported by the IIC include the first mobile broadband networks in Central America, pioneering sustainable forestry funds, women-led agricultural exporters in the Dominican Republic, and crowdfunding platforms expanding finance access.
The IIC typically provides between 5-15% of a project’s financing needs. This catalyst role in mobilizing resources from commercial banks and investors is key to the IIC’s developmental impact.
The inter american investment corporation is a pioneering impact investor that has deployed billions to further sustainable economic growth in Latin America and the Caribbean. By providing flexible financing and value-added support, it enables the private sector, especially SMEs, to drive job creation, innovation, climate action and shared prosperity across the region.