IFC Invests $250 Million in Banco Santander to Boost MSMEs and Financial Inclusion in Brazil

The IFC's financing is structured as a Social Bond, with the proceeds earmarked for generating positive social outcomes such as employment generation and financial inclusion.

The International Finance Corporation (IFC) is making a substantial investment of up to $250 million in Banco Santander to enhance access to finance for micro, small, and medium enterprises (MSMEs) in Brazil, particularly focusing on the underserved North and Northeast regions. This investment aims to bridge Brazil's social financing gap and support inclusive economic growth.

The IFC's financing is structured as a Social Bond, with the proceeds earmarked for generating positive social outcomes such as employment generation and financial inclusion. Of the total $250 million, $150 million will be allocated to improving access to finance for small and medium enterprises in underserved regions of Brazil, and $100 million will be dedicated to microentrepreneurs nationwide. This marks IFC's first social bond subscription in US dollars in Brazil.

MSMEs are crucial to Brazil's economy, accounting for approximately 54 percent of the country's employment. However, they face significant challenges in accessing finance, with a finance gap estimated at $483 billion by IFC's SME Finance Forum. This issue is particularly acute in regions with greater economic inequality, such as the North and Northeast. Despite contributing 6 percent and 14 percent to the country's GDP respectively, these regions receive only 3.3 percent and 12.5 percent of the country's commercial credits.

"We hope that IFC's investment in Banco Santander will encourage other financial institutions to promote a more inclusive environment," said Vittorio Di Bello, IFC Director, Financial Institutions Group. "Fostering the Brazilian entrepreneurship sector will highly contribute to the country's sustainable growth."

Gabriela Bertol, Head of Sustainability at Santander Brasil, emphasized that this Social Bond aligns with the Group's global sustainable finance strategy: "By supporting SMEs located in the North and Northeast regions and microcredit, we are contributing to the development of people and businesses in the areas that most need support."

IFC and Banco Santander have a history of collaboration in advancing climate and inclusion agendas in Brazil. In 2022, amid the COVID-19 pandemic, IFC invested $150 million in Banco Santander to expand access to finance for doctors and healthcare MSMEs for working capital and the purchase of medical equipment.

This latest investment underscores IFC's commitment to promoting sustainable and inclusive economic growth in Brazil by empowering MSMEs and fostering financial inclusion.