DEG awards green loan to Paraguayan SME bank

In Paraguay, extreme weather events and global climate change are already having direct consequences on productivity and economic output. The demand for climate-friendly technologies and solutions for adapting to climate change is correspondingly high.

DEG, together with French development bank Proparco and Dutch development bank FMO, is providing Sudameris Bank in Paraguay with a long-term loan of USD 120 million. DEG arranged the financing and is itself providing USD 40 million of the total amount. The special feature of the loan is that a major part of the funds is designated for investment in climate-related projects.

Sudameris’ customers are active in the agricultural industry, the manufacturing industry, trade and the services sector. As a universal bank, it offers financial services for small and medium-sized enterprises (SMEs) as well as for corporate and private customers.

Renewable energy and resource-efficient technologies

The financing enables Sudameris to offer its customers a new product: green loans. With this new product, small and medium-sized enterprises can invest in the expansion of renewable energy or in new technologies that contribute to energy or resource savings. Particularly in food production, the manufacturing industry and trade, enormous energy savings can be achieved with investment in new technology, for example through more efficient machinery or when boatmen purchase modern barges.

New DEG advisory service: Green Loan Quick Assessment

Awarding green loans is a completely new line of business in Paraguay. DEG worked very closely with Sudameris during the product development. In addition, the Green Loan Quick Assessment advisory service recently developed by DEG was implemented as a pilot scheme at Sudameris. In the first phase, the potential for green credit on the local market was assessed and selection criteria defined, which in some areas go beyond the internationally recognised ‘Green Loan Principles’. As the next step, Sudameris is making any necessary adjustments, for example in reporting, and awarding the first green loans.

There is a lot of interest in the Green Loan Quick Assessment. A pilot scheme has also been implemented with another DEG customer in Paraguay. Several schemes are currently being planned in other regions.