Pairing a Malbec with smart investments for a robust economy

The charming Saun Juan province in Argentina is famous for its wine, yet its businesses, 90% of which are MSMEs, face economic challenges

The charming province of San Juan is located in the western part of Argentina. Like in many Argentinean regions, agriculture is one of the most important economic activities, and in San Juan, especially grapes. It is the second wine producing province in Argentina.

The San Juan vineyards, nestled in the shadows of fertile hills, are filled with the Malbec’s fresh and exotic aroma. While their balsamic hints and mineral aromas are praised by wine lovers and earn high international ratings, winemakers struggle to make a comfortable living. In the mostly artificially irrigated fields, the economic challenge is felt by many and is not limited to its winemakers.

The province is also well known for its mining and regular oil production industry. Despite those rich resources, business productivity is at just 52 percent, well below the national average. Nonetheless, there is room for improvement opportunities in business productivity- especially around organic fresh vegetable agricultural export products.

In San Juan, 69 percent of the province’s economy is conducted by the private sector, of which 90 percent are micro, small and medium-sized enterprises (MSMEs). Supply chain members have very limited management capacities with little or no consensus regarding market development and trends. These members also falter in their consensus on technological models used in the primary, industrial and commercial sectors, and coordination among businesses in the same chain or among different chains is lacking.

Nestled among hills, the province is also well known for its mining and regular oil production industry. Despite those rich resources, business productivity is at just 52 percent, well below the national average.

What’s the solution to this complex problem?

To promote sustainable development, boosting gains in the social, economic and environmental fronts, the United Nations Development Programme (UNDP) in Argentina joined forces with the Inter-American Development Bank [IADB] and the Government of the Province of San Juan to increase the productivity of small and medium-sized enterprises (SMEs).

UNDP also helped the San Juan province establish its first Investment Development Agency to facilitate access to medium and long-term credit and to improve the managerial capacity as a way of developing the investment plans of the MSMEs. The initiative focuses on expanding SMEs’ access to credit and improving their management and coordination capacity to develop and carry out sound business and investment plans. This initiative counts on the National Central Bank and leading private banks´ support. Since 2007, it has benefitted more than 1400 SMEs through loans and another 550 SMEs through grants.

“The United Nations Development Programme together with the San Juan Agency for Investment Development, and the Inter-American Development Bank have provided invaluable and timely support for the implementation of standards to comply with customer requirements, protocols for good practices, food safety protocols. In addition, they provided support to hire agricultural engineers, trainings, external consultancies; that helped us gain knowledge, and taken together with the agency’s financing programme through local banks, is what has enabled us to develop in a very difficult and competitive market.” Diego Iglesias, Director Iceberg Agrícola S.A.

Among other initiatives to increase productivity, UNDP helped the San Juan province establish its first Investment Development Agency to facilitate access to medium and long-term credit and to improve the managerial capacity as a way of developing the investment plans of the MSMEs

Based on San Juan’s experience, UNDP teamed up with the Argentinean Government to develop a platform that promotes a social and environmental impact fund that will allow the MSMEs to access medium and long-term credit. The aim is to promote impact in the economic, social and environmental fronts of San Juan.

This platform will connect traditional and non-traditional partners, promote tools for strategic planning while promoting social, environment and economic impact aspects that will allows local MSMEs develop strong pipeline and project formulation. UNDP will also render support services to project implementation, looking into impact measurement and supporting certification standards to verify the Sustainable Development Goals (SDGs) contributions. This will enable SDG-aligned investment at scale, risk and impact management, monitoring, audit and evaluation mechanisms and tools for more stable enterprises — increasing their productivity and profit sustainably.

By promoting MSMEs’ social, environmental, and sustainable growth, we are promoting the achievement of the SDGs, to take care of the planet while improving people’s lives, to ensure that no one is left behind.

Text by Silvia Morimoto, UNDP Country Director in Argentina | Photos by: UNDP Argentina/Maider Arnaiz Igartúa