Opec fund pledges $25m loan to Honduran SMEs fighting pandemic and natural disasters

Small businesses have been hurt by double challenges of Covid-19 pandemic and two hurricanes that hit the country in 2020

Opec's international development fund loan will help Honduran SMEs in critical sectors. AFP

The Opec Fund for International Development (Ofid), the development finance arm of the Organisation of the Petroleum Exporting Countries, has pledged a $25 million loan to help small and medium enterprises hit by Covid-19 disruptions and the devastating effects of two hurricanes.

Ofid signed the agreement with Banco Ficohsa for on-lending to SMEs that operate in sectors including agriculture, manufacturing and textiles, the fund said in a statement on its website.

The loan will give Honduran SMEs access to funding through the local banking system that is needed to recover from the “unprecedented impact” of the Covid-19 pandemic and the hurricanes that hit the country in 2020, Abdulhamid Alkhalifa, director-general of Ofid, said.

“Supporting small businesses is key for economic stability and for job creation,” Mr Alkhalifa said. “Banco Ficohsa is in a strong position to expand the reach of this loan and ensure financial sustainability of SMEs in critical sectors.”

This is the fourth loan that the Opec fund has extended to Banco Ficohsa. Earlier proceeds provided about 134 sub-loans to SMEs operating in agribusiness, manufacturing and textiles, and to bolster the bank’s capital base.

In April, Ofid said it pledged $1 billion to help developing economies cope with the economic fallout of the coronavirus pandemic. The financing will be disbursed through public, private and trade finance loans, it said at the time.

The fund was established in 1976 by the then 13-member countries of Opec, including the UAE, to provide aid to developing countries.