Madrid, 14 March 2019.- The Spanish Cabinet last Friday authorised the Development Promotion Fund (FONPRODE) to engage in the Huruma Fund project, worth €20 million. This impact fund [1] promotes access to funding for small farmers across Latin America, the Caribbean, sub-Saharan Africa and Asia.

The initiative is a clear example of coordination between the Spanish public administration, European Union and the private sector (the latter will represent at least 70% of Fund undertakings).

FIRST COFIDES AND AECID BLENDING PROJECT

The Huruma Fund is the first project submitted by COFIDES in the framework of the European Union’s external aid instruments. The EU blending instrument allows non-refundable or concession funds to be mixed with reimbursable funds mobilised by accredited entities.

The project is distinguished by the role of Spain’s accredited entities: the Spanish Agency for International Development Cooperation (AECID), on the one hand, which acted as a financer through FONPRODE, and COFIDES, on the other, which structured the transaction and is managing the EU resources. This combination takes an innovative approach and is an example of the good coordination capacities of Spanish institutions. They bring together the AECID’s extensive experience in supporting financial inclusion and the development of the private sector of Spanish Cooperation´s partner countries and COFIDES’ skills in structuring transactions and leveraging private sector resources.

The Fund’s investment adviser is Spanish outfit GAWA Capital, the national leader in impact investment. The target size of the Huruma Fund is €80 million, of which €10 million will be contributed by the European Union in the form of first-loss equity, thereby mitigating the risk perception of private investors and allowing them to start out in this type of impact investment. FONPRODE’s €20 million contribution will be added to the project, reinforcing its role in supporting the lower part of the pyramid in both the farming and financial inclusion sectors.

To power the Fund’s impact, a Technical Assistance Facility will be created and provided with €9 million, of which €8 million will come from the EU. This shores up the goal of harnessing the work of the private sector as an agent for change in economic and social development that favours the inclusion of the most disadvantaged in the process of income and wealth creation and distribution.

COFIDES chairman José Luis Curbelo highlighted the “joint effort” undertaken by COFIDES and AECID “to achieve the synergies that will allow FONPRODE to engage in the project”. He said the fund “will promote the financial inclusion of farmers and micro, small and medium-sized enterprises in the agricultural sector in developing countries”. He concluded by saying that with this transaction, COFIDES is embarking on a funding path in coordination with the European Union that will put the company on an equal footing with other European development finance institutions.

FONPRODE is one of the leading financial instruments of Spanish Cooperation. It is administered by the Spanish Agency for International Development Cooperation (AECID) with the core objective of eradicating poverty, reducing social inequalities between people and communities and promoting gender equality, human rights advocacy and the human and sustainable development of impoverished countries.

AECID is attached to the Ministry of Foreign Affairs, European Union and Cooperation through the State Secretariat for International Cooperation and for Ibero-America and the Caribbean. It is the executive body of Spanish Cooperation and its priorities are the promotion of development and balance in international relations, the prevention and care of emergency situations, the promotion of democracy and fostering relations with partner countries. To this end it has instruments such as technical, economic and financial cooperation, humanitarian aid and education on development and social awareness.

COFIDES is a public-private company which has been offering financial support to Spanish companies investing abroad since 1988. It is accredited with the EU to manage Community budgets, allowing it to structure transactions with a high impact on development. It is also accredited with the UN’s Green Climate Fund and can structure operations on climate change mitigation and adaptation with the GCF. It is the exclusive manager of FIEX and FONPYME funds on behalf of the Secretariat of State for Trade attached to the Ministry of Industry, Trade and Tourism and supports AECID in managing FONPRODE funds. Shareholders include Banco Santander, Banco Bilbao Vizcaya Argentaria (BBVA), Banco Sabadell and CAF-Development Bank of Latin America.

[1] Impact investments are made into companies, organisations and funds with the intention to generate a measurable beneficial social or environmental impact alongside a financial return.