We committed USD 20 million in a senior secured loan to Finanzauto, a leading non-bank financial institution in Colombia. The investment will support productive vehicle loans for micro, small and medium enterprises (MSMEs), and promote the adoption of electric and hybrid vehicles.
MSMEs in developing countries cannot rely solely on the local logistics network to ship their goods and services. They often have to acquire their own productive vehicles via financing to be able to operate, grow and expand. In Colombia MSMEs account for a significant share of employment and economic activity, making vehicle financing a key enabler of formalization, income generation and regional connectivity. However, because of the small size of these businesses, they tend to be underserved by the financial sector. Finanzauto addresses this issue directly by specializing in providing productive vehicle loans to these businesses and unlock mobility in sectors where transport is essential – from agriculture, retail to logistics and services.
This sustainability-linked loan rewards Finanzauto when allocating its proceeds to electric and hybrid vehicles beyond a minimum threshold. The company has developed a system with which it can estimate their portfolio emissions in real-time. With this instrument, Norfund is able to connect financial returns to climate outcomes and provides a practical tool to contribute to Colombia’s electric transition in the transport sector while supporting small and medium enterprises with productive vehicle loans.
“Loans like these are enabled by Colombia’s robust commitment to sustainable finance and the frameworks it has developed to facilitate the transition to a cleaner economy, an agenda that initiatives such as FISDE are helping to reinforce in our region” Leimbach adds.
Colombia has set ambitious targets for electric vehicle deployment, but affordability and infrastructure remain key barriers. Finanzauto has developed a strategy to overcome these challenges and offers targeted loans for electric and hybrid vehicles.