- It is the first deal in Latin America and the Caribbean that is part of the We-Fi initiative, an international alliance to support the growth of companies owned or led by women.
IDB Invest, a member of the IDB Group, provided a $96 million loan to Elcatex and San Juan Textiles companies, both subsidiaries of Grupo Elcatex. The financing will help improve the production of Elcatex, one of the leading businesses in the textile sector in Honduras, will contribute to the construction and equipping of the San Juan Textiles plant, and will increase operations with small and medium-sized enterprises (SME) in the supply chain, especially those led or owned by women.
With a tenor of six years, this deal will enable Elcatex and San Juan Textiles to increase their capacity to produce cotton fabrics, diversify exports with a new production line for synthetic fabrics and create around 3,200 direct jobs, contributing to Honduras' socioeconomic development through the textile sector. The deal also includes the implementation of a gender approach aimed at increasing the number of companies in the supply chain that are led or owned by women, with the goal of maintaining and increasing the formal participation of women in this industry.
Using funds from the Women Entrepreneurs Finance Initiative (We-Fi) program, IDB Invest's advisory services team will work with Elcatex to identify opportunities to increase access to the value chain for women suppliers. The action plan includes training for senior management and the procurement team to disaggregate the training and suppliers monitoring system, as well as measures to enhance the process of incorporating new SME.
This is the first deal in Latin America and the Caribbean that is part of the We-Fi initiative, a partnership aimed at unlocking financing and market access for women-owned or women-led companies. We-Fi is an international program with 14 governments and six multilateral development banks as implementing partners, as well as other public and private sector actors from all over the world.
The deal with Elcatex and San Juan Textiles is part of IDB Invest's response to the crisis generated by COVID-19 in Latin America and the Caribbean and supports the manufacturing sector in Central America. Since the start of the pandemic, Elcatex has demonstrated unprecedented flexibility by initially adjusting its biosecurity protocols to protect its associates and later adapting its production, design and apparel lines to produce personal protection equipment like facemasks and surgical gowns. The long-term financing enables the growth of the client operations, strengthens the country’s foreign trade and halts job loss in the context of this health and economic crisis.
IDB Invest's financing package includes a $64 million loan from its own funds and mobilizing $32 million loan from the China Co-Financing Fund for Latin America and the Caribbean. The operation incorporates $210,000 in blended finance from the We-Fi fund.
These funds will be managed as performance-based incentives (PBI) based on meeting specific targets intended to increase the participation of SMEs owned or operated by women in the value chain and to increase Elcatex and San Juan Textiles’ purchase volume from such enterprises.
Honduras is one of the American continent’s leading exporters of textiles to the United States. Implementing a strategy to strengthen the textile industry, enhance innovation, and increase sustainability has made it one of the country's leading economic activities. In 2019, it accounted for 84 percent of exports of manufactured goods (maquila) and employed more than 150,000 workers directly and indirectly.
This deal potentially contributes to six United Nations Sustainable Development Goals (SDGs): No Poverty (SDG 1), Gender Equality (SDG 5), Decent Work and Economic Growth (SDG 8), industry, Innovation and Infrastructure (SDG 9), Reduced Inequalities (SDG 10), and Partnerships for the Goals (SDG 17).
As part of its strategy for the region, IDB Invest aims to strengthen the sectors that incorporate innovation and value added into the production process. Despite the impacts of the health emergency caused by COVID-19, Honduras’s textile industry has shown itself to be a pillar of economic strength for the country, with the capacity to generate high-quality jobs and promote sustainable growth.
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 $12.1 billion in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Grupo Elcatex
Grupo Elcatex was founded in 1960 by Juan Miguel Canahuati, a pioneer in the Honduran textile industry. The group has diversified its operations, and its business is sorted into four divisions: textiles and synthetic filament; energy; industrial parks; and technology and innovation. It produces 9,400 direct jobs, impacting more than 18,000 people. Elcatex is a market leader, with annual production of 85 million pounds of fabric. It operates five sewing plants that produce more than 120 million pieces of clothing per year (white T-shirts, sweatshirts, men's underwear, and sport clothing). The main export destination is the United States, thanks to Honduras’s competitive and comparative advantages (geographical location, workforce availability, regulatory framework with incentives, free trade agreements, etc.).