IDB and BNDES Partner to Launch $900M Credit Program for MSMEs in Brazil’s Amazon

To ensure environmental sustainability, the program includes a zero-deforestation policy and requires geo-referenced monitoring of land use in beneficiary areas.

The Inter-American Development Bank (IDB) has approved a $750 million loan to the Brazilian Development Bank (BNDES) to establish the BID-BNDES Access to Credit Program for Micro, Small, and Medium-Sized Enterprises (MSMEs) and small entrepreneurs in the Brazilian Amazon. Supplemented by a $150 million contribution from BNDES, the $900 million program is designed to stimulate sustainable economic activities, create jobs, and enhance income levels in the region while preserving its fragile ecosystem.

The program incorporates ambitious targets to maximize its impact on the region’s sustainable development:

30% of funds are designated for women entrepreneurs.

20% will support climate investments, particularly in low-carbon agriculture.

70% will target borrowers in municipalities with a Human Development Index (HDI) below the national average.

To ensure environmental sustainability, the program includes a zero-deforestation policy and requires geo-referenced monitoring of land use in beneficiary areas.

Addressing Barriers to Financing

MSMEs are pivotal to Brazil’s economy, representing its largest source of employment. However, access to long-term financing remains a significant hurdle, particularly in the Amazon, where 75% of the population resides in urban areas, and 8 million people are unemployed or engaged in informal jobs.

This program aims to bridge this financing gap by offering loans for productive investments such as machinery, equipment, vehicles, and services. These investments are expected to enable MSMEs to adopt sustainable practices, thereby fostering economic development while preserving the environment.

Supporting Economic and Environmental Goals

“The future of the Amazon depends on a holistic vision that protects the environment while offering sustainable economic opportunities to those living there. This approach is central to our Amazonia Forever program and our alliance with BNDES to benefit 16,000 MSMEs in the Brazilian Amazon,” said IDB President Ilan Goldfajn.

BNDES President Aloizio Mercadante highlighted the program's alignment with President Lula’s administration’s focus on sustainable development: “This loan will expand the capacity of SMEs to invest in new production methods and sustainable practices, essential for driving economic development while preserving the Amazon and regulating the climate.”

Leveraging BNDES Expertise

BNDES’s established track record with MSMEs positions it as a key partner in delivering the program. Its indirect credit model, which works through accredited financial agents, enables the decentralization of credit access, invigorating Brazil's banking sector. This approach has the potential to mobilize additional private-sector resources, broadening the program’s reach and impact.

The IDB loan features favorable terms, including a 25-year repayment period, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).

Pathway to a Resilient Amazon

This program represents a significant step toward addressing the challenges of the Brazilian Amazon, balancing urgent environmental protection with the need for inclusive, sustainable economic growth. By empowering MSMEs, supporting women entrepreneurs, and incentivizing climate-smart practices, the BID-BNDES partnership aims to ensure a thriving Amazon for generations to come.