To realize their full potential, such enterprises increasingly require equity capital, loans on reasonable terms, and assistance in developing efficient production, marketing, and financial strategies. If the advances made by Latin American and Caribbean economies are to be sustainable, the region needs private investment that is willing to commit for the long term. And it needs institutions capable of providing and catalyzing those investment flows while shaping their developmental impact. Cooperative arrangements between government agencies, multilateral institutions, and private sector participants are imperative to ensure success in the execution of strategies that will cement the macroeconomic policies and structural reforms required to attract new financial flows. Creative partnership approaches to mitigate the impact of the financial turmoil affecting emerging economies will also be needed.
Commercial banks are often reluctant to lend to companies other than large, well-capitalized firms.
Foreign investors and financial institutions do not normally focus on SMEs because they perceive the potential returns to be less attractive than those in the larger-scale segment of the market. The lack of long-term funding on reasonable terms has led to severe decapitalization of the region's SMEs. The Corporation will continue to search actively for innovative projects that have valuable demonstration effects and the potential to be replicated. Through its presence, as well as by means of its cofinancing program, the Corporation will seek to mobilize the largest amount possible of private sector funds that would not be available without IIC's participation. The Corporation was created as an instrument for development, designed to strengthen the small and medium-size private enterprises of the region.