2024.05.08
On May 1, the Japan International Cooperation Agency (JICA) signed a Loan Agreement with Banco Cooperativo Sicredi S.A., a financial institution in Brazil, to provide up to USD 100 million. The loan will be JICA’s first co-financing with the Development Bank of Latin America and the Caribbean (Corporación Andina de Fomento: CAF) who has signed an agreement of up to USD 50 million.
The establishment of this project was announced through Joint Statement on Further Strengthening the Japan-Brazil Strategic and Global Partnership, declared on May 3. Also, this project is included in one of the projects and MOUs singed in relation to during Prime Minister Kishida Fumio’s official visit to Brazil.
Associate of Sicredi System
The agriculture sector plays an essential role in the Brazilian economy, accounting for approximately 27 percent of the country’s GDP in 2020. Moreover, Brazil is one of the world's largest exporters of several agricultural products such as sugar, coffee, soybean-related products, corn, and meat. The growth of Brazil's agricultural sector is therefore important not only for the country's economic development but also for global food security. However, Brazilian farmers, especially small-scale farmers, have limited access to finance, which prevents them from making capital investments that would contribute to higher productivity.
Improving access to finance for micro-, small, and medium-sized enterprises (MSMEs) is another major challenge in Brazil. MSMEs account for 98.5% of the country's enterprises and approximately 27% of the country's GDP, supporting 54.5% of formal employment. Despite this, the financing gap for MSMEs in Brazil is estimated to be approximately USD 626 billion, or equal to about 35% of the country's GDP, indicating that the country is far from meeting its own financing needs.
The Sicredi system (Sistema de Crédito Cooperativo) where Banco Cooperativo Sicredi S.A. takes role of its financing, originally established in 1902, is the oldest credit union group in Latin America and one of the largest in Brazil. The system has 105 credit unions as its members, with approximately 2,600 offices and more than 7 million associates in all 27 states of the country. With its extensive network in the country's rural areas, the Sicredi system will utilize this JICA loan to finance Brazil’s agriculture sector and the country's MSMEs.
This project will promote the sustainable economic development of Brazil by improving access to finance for the country's agricultural sector and MSMEs, thereby contributing to the achievement of SDGs Goals 1 (No poverty), 2 (Zero hunger), 8 (Decent work and economic growth), 9 (Industry, innovation and infrastructure), and 17 (Partnership for the Goals).
This project applies to the Facility for Supporting Agricultural supply chain and Food security Enhancement (SAFE), and the Facility for Accelerating Financial Inclusion (FAFI).
JICA will continue to support access to finance for the agricultural sector and MSMEs in Brazil and other countries around the world.
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