IFC launches $4bn platform to support small firms in emerging markets
TLDR
- IFC launches $4 billion MSME Financing Platform targeting women-owned businesses, agriculture, and climate sectors in emerging markets.
- Program addresses financial barriers for micro, small, and medium-sized enterprises (MSMEs) in developing economies.
- Funds advanced to diverse financial institutions, including banks, non-bank financial institutions, microfinance, and digital lenders to spur growth and resilience.
The World Bank's International Finance Corporation (IFC) has launched a $4 billion program aimed at providing financing to small businesses in emerging markets.
With a focus on women-owned firms, as well as those operating in agriculture and climate sectors, the MSME Financing Platform seeks to address significant financial barriers hindering the potential of micro, small, and medium-sized enterprises (MSMEs).
The program will advance funds to various financial institutions that cater to MSMEs, including banks, non-bank financial institutions, microfinance institutions, and digital lenders. It also aims to leverage credit enhancements to attract an additional $4 billion in private sector capital, further supporting the growth and resilience of small businesses in developing economies.
Key Takeaways
The significant role of micro, small, and medium-sized enterprises (MSMEs) in economies worldwide cannot be overstated, as they comprise over 90% of all firms and contribute substantially to employment and GDP. However, despite their economic significance, MSMEs often face challenges in accessing finance, with the global financing gap estimated at around $5.7 trillion annually by the SME Finance Forum. Factors such as tighter credit conditions, increasing interest rates, and reduced risk appetite among traditional lenders have exacerbated this issue. To address these challenges, the International Finance Corporation (IFC) aims to facilitate access to finance for MSMEs by offering to absorb the initial losses on loans, thereby incentivizing mainstream lenders to extend credit to this vital sector of the economy.
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