news - FMO advances financial inclusion via first Columbian Financial Institution transaction through USD 50mln loan with Banco Mundo Mujer

FMO advances financial inclusion via its first Columbian Financial Institution transaction through USD 50mln synthetic LCY agreement with Banco Mundo Mujer

FMO, the Dutch entreprenurial development bank is proud to announce the signing of a USD 50 mln loan facility with microfinance bank Banco Mundo Mujer (“BMM”) in Colombia. As FMO' s first transaction with a financial institution in Colombia, FMO is providing a USD 50mln senior unsecured loan in synthetic local currency to support access to finance for micro entrepreneurs and small companies, mainly targeting female microentrepreneurs. This financing contributes to advancing SDG 5, SDG 8 and SDG 10.

A success story of economic and social progress, Colombia has a high potential to achieve a stronger and more inclusive growth. 

Colombia is Latin America’s 4th largest economy and has the 3rd largest population with approximately 52 million inhabitants. The country faces structural socioeconomic challenges as it continues to be one of the most unequal countries in the world: it ranks highest among all OECD countries. The segment of microfinance and small companies in Colombia is characterized by high levels of informality, with 6 out of 10 microenterprises operating informally. According to information from the Ministry of Commerce of Colombia, 1.8 million companies were registered per March 2023, of which 95.3% are microenterprises, 3.5% are small, and 0.9% and 0.3% are medium and large enterprises, respectively.

Banco Mundo Mujer plays an important role in supporting microentrepreneurs thrive in their businesses and advance social and economic development in Colombia.

With its total assets reaching ~USD 858mln and a loan book of ~USD 702mln, BMM is the leading private microfinance bank in Colombia by loan portfolio and number of borrowers. BMM has operated as a bank since 2015 but has nearly 4 decades of lending experience under the non-profit Fundación Mundo Mujer, its main shareholder. Headquartered in Popayan in the south of Colombia, BMM serves approximately 700,000 clients in most regions of Colombia, predominantly the lower income population and female microentrepreneurs, with very limited or none support from the traditional banking sector.

Sustainability and social and economic development are at the core of BMM’s strategy, demonstrated through its several product innovations, its commitment to Client Protection Principles and affiliations to the Global Alliance for Banking on Values and Green Protocol of Asobancaria (Federation of private banks in Colombia). BMM is the first microfinance institution to join the program Colombia Carbon Neutrality of the Ministry of Environment, an initiative that seeks to promote, strengthen and recognize the proper management of GHG emissions from public and private organizations as part of the country's commitments to climate action. 

FMO’s financing will allow BMM to support microfinance and small companies, particularly female microentrepreneurs, contributing to SDG 5 and SDG 10 and aligned with FMO’s 2030 strategy. BMM’s core business is microfinance with the average loan size in the portfolio being USD 900 and 57% of its borrowers are female. 

Juan Jose Dada, Director Financial Institutions at FMO, said: “We thank Banco Mundo Mujer for their trust and are very pleased with the closing of this financing, which marks the beginning of a long-term partnership focused on advancing financial inclusion in Colombia. For FMO, this also represents a landmark transaction for being our first one with a Colombian financial institution, allowing us to create a footprint through a highly impactful bank such as Banco Mundo Mujer.”

Jose Vicente Velasco Melo, CEO of BMM added: “We are proud to be the first Colombian bank to close a transaction with FMO, through which we obtain funding that allows us to develop our objective of supporting access to finance for lower income population, female microentrepreneurs and small companies, promoting financial inclusion and social mobility in Colombia.”

We are thankful to the embassy of the Netherlands in Colombia for hospitality and meaningful discussions together with our client Banco Mundo Mujer!