IDB Invest will provide a reverse factoring facility of up to $10 million to the suppliers of Tiendas TIA, one of the main supermarket chains in Ecuador.
The project will provide Tiendas TIA with a financial solution to improve the financing conditions for micro, small and medium-sized enterprises (MSMEs) that operate as Tiendas TIA’s suppliers and strengthen the supply chain of its entire network of supermarket stores, contributing to IDB Invest’s purpose of integrating companies in local, regional or global value chains.
Photo: IDB Invest
Tiendas TIA has more than 600 MSME suppliers and the objective is that the project can benefit a part of these in a gradual and increasing way. Access to financing is critical for the development of the productive sector as the engine of the country’s sustainable growth. The Ecuadorian business fabric is made up of MSMEs representing 99% of all establishments and generating 68% of the country’s employment.
Under the facility, the suppliers of Tiendas TIA, mostly MSMEs, will be able to sell their invoices (accounts receivable), payable and confirmed by Tiendas TIA to IDB Invest. In this way, suppliers would be anticipating the collection of these accounts receivable. The monetization of said accounts receivable allows MSMEs to finance their working capital without incurring bank debt, at a competitive price corresponding to Tiendas TIA’s financial risk, and under terms and conditions typically not available to this type of company.
The deal is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): Decent work and economic growth (SDG 8), Industry, innovation and infrastructure (SDG 9), and Responsible Consumption and Production (SDG 12).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $15.3 billion in asset management and 375 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
TIA is one of the companies with a greater footprint in Ecuador. Since its beginnings in 1960 in the city of Guayaquil, it seeks to bring quality, variety and economy to Ecuadorian families. It has 252 stores in 22 provinces and 110 cities in the country; with a workforce of +8,300 employees who live the corporate values every day and seek to achieve their purpose: to improve the quality of life of their customers and their communities, creating relevant experiences with honest brands.