August 27, 2024
The Norwegian development finance institution, Norfund, has invested 10 million USD in the Honduran bank Banco Popular. The bank specializes in microfinance and lending to small and medium sized enterprises.
Despite making progress in reducing poverty, Honduras still ranks as one of the poorest and most unequal countries in the region. As of 2023, 51.3% of the population lives below the national poverty line. Only 45% of the population has a bank account.
Mountains cover about three quarters of Honduras, making it complicated to reach the approximately 40% of the population that resides in rural areas with financial services. Banco Popular has about half of their clients in rural areas and serves them through its 41 offices around the country.
“We are very pleased with this investment in Banco Popular and look forward to following the financial and developmental results. Microentrepreneurs, when they have additional income, tend to favor their closest family environment, which we believe is crucial to reduce poverty.”
Says Maria Esther Boquin, Investment Manager in Norfund.
Micro and small businesses are key job creators and play a crucial role in driving the economic engine in Honduras. Norfund’s loan will support the bank’s medium-term financing, which will allow it to offer longer-term financing to micro and small business clients, helping to boost their growth potential and providing them with greater sustainability in their business models.
The investment is a senior loan given in the local currency, Honduran Lempira.
“Financing microfinance institutions in local currency is essential as it mitigates foreign exchange risk, safeguarding both the institutions and their clients from currency fluctuations that could otherwise result in financial instability.” Added Maria Esther Boquin.
The shareholders of Banco Popular consist of the Dutch and Belgian Development Finance Institutions, Triple Jump and Incofin.