IFC, a member of the World Bank Group, and the Netherlands Ministry of Foreign Affairs will provide financing and advice to small and medium enterprises (SMEs), especially to those in difficult to reach segments and in fragile markets, by lending through emerging market banks and other financial intermediaries.
The Dutch pledged $27 million to IFC’s Global SME Finance Facility, which was established in 2012 in response to the G-20’s call to bridge the trillion dollar financing gap for SMEs. The commitment is made up of $16 million to support risk sharing facilities and $11 million for advisory projects.
Dimitris Tsitsiragos, IFC Vice-President for Global Client Services said “SMEs account for over two-thirds of employment in developing countries, yet they face difficulties in accessing finance to grow and create jobs. Our partnership with the Netherlands and other like-minded partners will help support SMEs and demonstrate the viability of SME financing.” He spoke at the Global SME Finance Forum, which took place alongside the G20 Leader’s Summit in Antalya, Turkey last week.
“With our contribution, the Global SME Finance Facility will focus on women entrepreneurs in low income countries," said Jeroen Roodenburg, Director Sustainable Economic Development and Ambassador Private Sector & Development Cooperation at the Ministry of Foreign Affairs of the Netherlands.
The Global SME Finance facility is a first-of-its kind facility, to which IFC has committed $500 million that mobilizes funding from donors, international finance institutions, and the private sector, to help banks scale up SME lending. The facility targets local banks wishing to lend to SMEs that don’t have access to finance, in particular women-owned SMEs, agriculture, climate-related businesses, and SMEs in fragile states.
The Facility already has about 75 active investment and advisory projects in more than 25 countries The Facility has been able to reach entrepreneurs across West Africa, support fire safety remediation for garment factories in Bangladesh, farmers in Tanzania, and SMEs in Cote d’Ivoire and India amongst many others.
Through its integrated Investment and Advisory Services, the Facility expects to facilitate the disbursement of $8 billion in SME loans and will support the creation of 1.1 million jobs by 2025 in places that need it most.
The United Kingdom’s Department for International Development (DFID) was the facility’s first donor with $120 million, and the EIB is also a partner in the Facility having committed $100 million to support risk sharing facilities in Africa.
The signing happened at the launch of the SME Finance Forum’s membership network in Antalya, Turkey. The SME Finance Forum, an initiative of the G20, works to expand access to finance for small and medium businesses.
The Forum operates a global membership network that brings together financial institutions, technology companies, and development finance institutions to share knowledge, spur innovation, and promote the growth of small and medium enterprises (SMEs).
Managed by IFC, the SME Finance Forum was established in 2012. The SME Finance Forum is an implementing partner for the G20 Global Partnership for Financial Inclusion.