IFC Invests $50 Million in Los Héroes to Improve Financial Inclusion in Chile

25 April, 2018

 

Original source: IFC

IFC, a member of the World Bank Group, is providing a $50 million loan to Caja de Compensación de Asignación Familiar Los Héroes, one of the largest cajas de compensación in Chile to help improve financial inclusion in the country.

This is the first international funding to a caja de compensación in Chile. IFC’s 5-year facility to Los Héroes will support the expansion of its social credit lending program to low-income workers and retirees.

Cajas de compensación, non-profit financial institutions focused on providing social security services, play a critical role in helping to reduce the access to credit gap in Chile. The Cajas system provides services to 7 million members including 5.6 million workers (nearly 63% of Chile’s economically active population) and 1.4 million retirees, and are the only institutions allowed to offer payroll loans in Chile. While the World Bank’s 2014 Global Findex Database indicates that 63 percent of the Chilean adult population hold an account with a financial institution, only 56 percent of the poorest 40 percent of Chile’s population have a bank account. This is well below other high-income OECD countries, where the bank account access indicator stands at 94 percent on average. 

"This is the first time an international loan is granted to a caja de compensación in Chile; this is a sign of the support from IFC to the Cajas system and opens an opportunity for the diversification of financing sources", said Alejandro Muñoz, General Manager of Los Héroes. 

“IFC is excited to partner with Los Heroes in this first international loan to a caja de compensación in Chile,” said Marcelo Castellanos, IFC Manager for the Financial Institutions Group in Latin America and the Caribbean. “Through this investment, IFC is supporting the strengthening of the financial markets in Chile and helping to expand the access to quality financial services to its population. Filling the access to credit gap is a strategic priority for IFC as it is critical to promote inclusive and sustainable economic growth in developing countries,” he added. 

In the past five fiscal years, IFC invested almost $ 9 billions in the financial sector in the Latin America and the Caribbean region, in long-term investments, including mobilization. This financing to Los Heroes is part of IFC’s strategic focus on supporting local financial markets to achieve development impact. IFC aims to achieve this goal through the use of innovative financial products and mobilization, fostering micro, small and medium enterprises, encouraging corporate social responsibility, protecting natural resources through environmentally-sustainable business practices, and promoting business expansion into other emerging markets. For more information about IFC in Latin America and the Caribbean, visit www.ifc.org/lac.

About Los Héroes 
Caja de Compensación Los Héroes is a non-profit private corporation, part of the Chilean social security system. Its main objective is to provide benefits to its 937,851 members; it plays a relevant role in promoting social inclusion in addition to financial inclusion, as it is available to people who often have difficulty accessing the financial market. For more information, visit www.losheroes.cl.

About IFC 
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org.

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