OPEC Fund Annual Report 2024

03 | THE DELIVERY – FINANCIAL INSTITUTIONS

FINANCIAL INSTITUTIONS

Opening up finance in the Dominican Republic

Local firms help drive economic development, yet many struggle to access finance. Globally, more than 40 percent of micro, small and medium-sized enterprises (MSMEs) have unmet financing needs, according to the International Finance Corporation (IFC). In 2024, the OPEC Fund provided US$270 million to the financial services sector in partner countries worldwide.

Founded by the Spanish in 1496, Santo Domingo was the first permanent European settlement in the Americas. Over 500 years later, what is now the Dominican Republic (DR) has grown to become the largest economy in the Caribbean and Central America region, driven by tourism, services and manufacturing. Ninety-eight percent of DR firms are MSMEs, providing well over half of all jobs and contributing almost 40 percent of GDP, according to the UN Development Programme. Yet many local businesses stay small not for a lack of talent or ambition — but because they cannot access finance. Barely 11 percent hold personal loans from financial institutions. Part of the problem is that banking penetration (the number of bank accounts, branches and ATMs per capita) remains low across the country. Yet the bigger picture is clearly gender-biased. The national MSME “finance gap” amounts to almost US$13 billion and it is stifling two-thirds of female-led firms compared to just 8 percent of their male-led counterparts. That is the stark background to a new US$10m OPEC Fund loan to Banesco Banco Universal for on-lending to SMEs, agricultural and women-led small firms across the country. Working in tandem with the Inter-American Development Bank (IDB), the loan is designed to help underserved businesses access funding and in turn improve financial inclusion and sustainable economic development. The OPEC Fund loan is supported by joint technical assistance from the OPEC Fund and lDB Invest, the private sector arm of IDB, which is focusing on gender studies, capacity assessments and the devel- opment of a broader strategy to support women-led businesses. The program also includes gender diversity training, portfolio analysis and adjustments to Banesco’s risk model to ensure more inclusive financial services.

ABDULHAMID ALKHALIFA President, OPEC Fund

“This loan is a significant step in expanding access to finance for small businesses, especially those led by women. By providing much-needed finance, we are supporting inclusive growth and strength- ening the Dominican Republic’s economy. This initiative aligns with our commitment to fostering sustainable development and promoting financial inclusion.”

ESTEBAN CHEDIAK Investment Manager, OPEC Fund

“I am incredibly proud to be part of the solution that will bring access to essential financial services to SMEs and women-led small businesses in the Dominican Republic. This partnership with IDB Invest is not only about empowering small enterprises but also addressing the broader issue of financial inclusion and reaching the underbanked communities in the country.”