ALIDE acknowledges best financial practices by granting the ALIDE 2010 awards

One of the innovations in this Latin American contest, which took place in Fortaleza, Brazil, during ALIDE 40th General Assembly, is ALIDE Green Award, which intends to promote a greater commitment of development banking towards environmental projects.

The climate change is, without doubt, one of the main threats for the growth of Latin American and the Caribbean countries; therefore, one of the greatest challenges of the financial system is to contribute to mitigate the greenhouse effect and stimulate projects designed to maintain the environmental balance.

This is why, ALIDE, as the regional public development banking representative, looked for the way to encourage their 83 members to start up strategies designed to finance “green” projects, by including the category of ALIDE GREEN AWARD in the 2010 edition of ALIDE Awards.

This special category, aimed at recognizing financial initiatives to fight and adapt to climate change, has been added to the other three categories, with which ALIDE acknowledges the best financial practices of their member institutions every year. These categories are “Financial Products; Technological Management and Modernization”; and “Information, Technical Assistance and Social Responsibility”.

Fourteen proposals (from 11 institutions) were submitted in three of the four categories. Four institutions were awarded, and Brazil (with two successful experiences), Mexico and Peru stood out.

    THE WINNERS

MUNICIPALITIES WITH ACCESS TO BANKING. The Best Financial Product award was granted to Fondo de Aportaciones para la Infraestructura Social (FAIS) of Banco Nacional de Obras y Servicios Públicos (Banobras) of Mexico, aimed at banking the least-developed municipalities by providing technical assistance, direct financing or facilitating the access to private financing resources.

In Mexico, there are 2,454 municipalities, of which only 25% used bank credit to finance their infrastructure investment; 566 of them were attended by BANOBRAS and 65 by commercial banking at the end of 2006. The coverage was even more deficient in the case of municipalities with a lower level of development. With this program, 1,133 municipalities were attended, covering small and medium-scale municipalities, increasing the coverage by 25% in 2006, and by 41% tday. There are States in which the coverage reached 100%.

BUSINESS AND CULTURE. On the other hand, in the category “Information, Technical Assistance and Social Responsibility”, two experiences were awarded. One of them is the program called “Socio-cultural and business spaces”; of Banco do Nordeste do Brasil (BNB), that supports the socio-cultural inclusion and entrepreneurship by financing 2,200 projects up to the present day, comprising cultural goods and services production, distribution, spreading and commercialization.

Social, cultural and business spaces are the Bank’s innovating product that links businesses and cultural activities. It does not only promote economical and social inclusion but also the cultural inclusion of Northeastern population without affecting the environment. BNB boosts the social and cultural development through its cultural centers and by culture-specific credit lines and structured sponsorships.

The culture-specific credit line finances the implementation, extension, modernization and modification of cultural sector entrepreneurships, by granting credits for investments, investment-associated working capital; and purchase of supplies by providers of the services. Socio-cultural and business spaces have two lines of action: a business line that promotes banking inclusion; and a socio-cultural line, which provides digital, social and cultural inclusion and contributes to the generation of work and income.

MICRO AND SMALL ENTERPRISES (MSE) TAKE-OFF. The second awarded experience in the category “Information, technical assistance and social responsibility” was “Ventanillas Mypes” (MSE Windows) program from Banco de la Nación de Perú (BN), to provide micro and small enterprises (MSE) in poor areas (where there is no private banking offer) with a greater access to financial services.

This support is carried out through agreements with financial intermediaries (FI) that attend in localities in which Banco de la Nación (BN) is the only banking offer in the area.

For this purpose, BN has set the procedures to be followed for operating support in MSE window indicating the activities to be carried out by the FI, the branch managers or unit heads) for loan concession, signature taking, loan disbursement, loan recovery, MSE security custody, accounting procedures, refunds, responsibilities and the final provisions related with MSE loans operation.

Between 2006 and 2010, this program has benefited more than 190,000 families living in poor areas and has granted a total of 191,179 credits, for approximately US$230 million. Additionally, the number of saving accounts that were opened in agencies where Banco de la Nación is the only bank amounts to 672,844 accounts, with an average annual growth of 22.7%. Something similar is observed for checking accounts.

GREEN MARCH. Finally, the proposal that won the ALIDE Green category was “Fondo Amazonia” program of Banco Nacional de Desenvolvimento Econômico e Social (BNDES), of Brazil. This initiative intends to minimize gas emissions produced by the Amazon forest deforestation and degradation in this country, and to allocate up to 20% of its resources to monitoring systems in other tropical zones or countries.

The Fund’s fund-raising mechanism is based on the results obtained in the reduction of gas emissions originated by the deforestation of the Brazilian Amazon. The Norwegian government has offered to donate funds for approximately US$305 million that shall be delivered during the 2009 -2011period.

The Fund applications include the following areas: 1) public forests and protected areas management; 2) environmental control, monitoring and supervision; 3) sustainable forest management; 4) economic activities developed from the sustainable use of the forest; 5) ecological and economic zoning, territorial planning and land regularization; 6) conservation and sustainable use of biodiversity; and 7) recuperation of deforested areas. In its first year, 2009, the Fund has financed projects for approximately US$40 million.

The contest was announced on February 1st, 2010, and proposals were evaluated by an independent jury in April. The awards ceremony was carried out during the Institutional Issues Meeting during ALIDE 40th Regular Meeting of the General Assembly, in Fortaleza, Brazil.