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The IIC’s Trust Fund and Technical Assistance activities were set up in order to provide and manage support to the technical assistance activities carried out by the IIC and funded primarily through trust funds established between the IIC and donor countries. The Finance and Risk Management Division manages donor trust funds, coordinates relationships with individual donor members, and works with all departments and units within the IIC to design, implement, and monitor technical assistance activities.
Many of the technical assistance projects at the IIC can be carried out thanks to the generous support provided through trust funds set up by IIC member countries. Technical assistance clearly benefits the small and medium-size client that is the main focus of IIC activities in the region. Through the technical assistance these clients receive, management skills are improved, environmental deficiencies are corrected, necessary sector and market studies are carried out, and other technical challenges are resolved. The IIC likewise benefits from being involved in technical assistance projects, as it is able through this assistance to create an important demonstration effect for other SMEs that are contemplating the professionalization of their operations, and is able as well to finance SMEs that would otherwise be reluctant or unable to invest the necessary resources to effect the changes identified. Finally, donor countries benefit from the visibility that they achieve through these programs, from the procurement and consulting opportunities arising from project development, and from the experiences gained from their involvement.
The main focus of the technical assistance provided by the IIC is on the SME client itself, and on the following critical areas:
Preinvestment consultancy services designed to assess project feasibility and to prepare a company for the medium and long-term funding offered by the IIC and other lenders. Such consultancy services include sector and market studies and the evaluation of specific projects under consideration for financing.
Technical assistance for SMEs that are potential clients of the IIC but require assistance to improve aspects such as environmental compliance, improvements in their information systems, legal assistance, and management consulting. Such technical assistance is also available for existing clients who need to upgrade certain aspects of their operations.
Programs, such as FINPYME , improvements in the legal framework for structured transactions, corporate governance activities, etc., that ultimately serve to change the environment in which the region’s SMEs operate.
Presently, the IIC is working with the following donors to carry out technical assistance projects in Latin America and the Caribbean:
Austria: Set up in September 1999 between the IIC and the Finanzierungsgarantie-Gesellschaft m.b.H. of the Government of Austria, this Fund focuses on financing technical assistance throughout the Latin American and Caribbean region. A noteworthy example of trust fund use was the financing of consultancy services related to the carbon credits to be generated by Sinersa , a Peruvian 15.4 MW hydroelectric plant. Also, the Austrian Fund is presently financing a watershed management program for the Abanico river in Ecuador.
Denmark:The Consulting Services Trust Fund was set up in 2003 between the Government of Denmark and the IIC. It has been active in financing consulting services related to the IIC’s technical and operational support to small and medium-sized enterprises in Latin America and the Caribbean. The Fund has a special focus on projects originating in Nicaragua and Bolivia, where resources were used to undertake an environmental assessment operation for a textile plant. Other projects include a technical analysis of the feasibility of a project involving ship repair and construction services in the Dominican Republic, and a project to assess the technical and financial viability of a power plant in Guatemala. Fund resources are presently being used to assess the viability of four municipal landfill projects in Ecuador for biogas recovery and combustion.
Italy: The IIC’s first trust fund was established in 1992 with the Directorate General for Development Cooperation of the Ministry of Foreign Affairs of the Government of the Republic of Italy. Fund activities can include preparing prefeasibility and feasibility studies; setting up pilot programs; providing technical assistance related to improvements in existing projects; and facilitating technology transfer. Existing projects include the Italian Development Program and a project in Paraguay to evaluate the land, civil works, and improvements of an agribusiness company, Tecnomyl. Separately, the Italian Government is presently financing a 75 million Euro facility to grant needed long-term loans to SMEs in Argentina through the establishment of the Italian Special Trust Fund for the Sustainable Development of Small and Medium-Sized Enterprises in Argentina.
Korea: In 2005, the IIC and the Government of the Republic of Korea established the Korea-IIC SME Development Trust Fund to finance non-reimbursable technical assistance and other activities in support of the IIC’s mission and operations in its regional developing member countries, with preference for the smaller and less developed economies. With funding support, the IIC has recently rolled out its FINPYME program and other activities. In addition, separate Memoranda of Understanding (MOUs) have been signed between the IIC and the Export-Import Bank of Korea, the Small Business Corporation of Korea, and the Korea International Trade Association, in order to support business development between Korean and Latin American and Caribbean companies and institutions.
Other projects recently approved by the Korean Trust Fund include technical assistance projects in Brazil (to review the technical feasibility of a mining company), El Salvador (to assess the technical feasibility of a paper mill), and Paraguay (to upgrade the accounting sophistication of approximately eight potential clients of the IIC). Finally, Korean Trust Fund resources have been used to sponsor an event hosted by the IIC to develop an emission reduction sale and purchase agreement template to benefit the sellers of carbon credits. Funds resources have also been used to provide legal assistance to smaller companies in IIC member countries with smaller economies.
Switzerland: In 1994, a Technical Cooperation Trust Fund for Consulting Services and Training Activities was signed between the IDB and the Government of the Swiss Confederation. This fund is administered by the IDB, and in June 2004 the agreement was amended to include projects presented for funding by the IIC. The focus of the Swiss Fund is on providing technical assistance in Bolivia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua and Peru. Recently, the Trust Fund has approved two environmental programs being undertaken by the IIC: first, it is providing funding for the development of an Environmental Risk Management Tool for Financial Institutions in Latin America. The tool will consist of an interactive CD that aims at assisting users in managing the risks and opportunities related to environmental and social aspects of financial services, with a particular emphasis on providing information on local environmental regulatory requirements, which is not always readily available to business professionals. Second, it will finance the dissemination and extensive distribution of a Certified Emission Reduction Sale and Purchase Agreement template and guidance document which will be done with the objective of educating the emerging carbon market and reaching out to project developers and CER sellers in developing countries who have limited or no access to relevant expertise in legal advice Press Release 03-14-2007 - Press Release 05-03-2007 - .
United States: The USTDA-IIC Evergreen Fund was established in 1995 in order to finance technical assistance for projects that provide potential opportunities for U.S. companies. As an example of such assistance, USTDA financed a project in which many IIC clients benefited from a thorough review of their environmental compliance. Based on this review, specific recommendations were made on ways to improve the companies’ operations.
Since the beginning of 2005, a total of more than US$1 million in resources has been dedicated to technical assistance. In addition, the Korean Trust Fund recently approved more than US$500,000 for the FINPYME project .
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