Berlin, 3 November, 2017 -- IFC, a member of the World Bank Group, pays special attention to small businesses because they are the engines of job creation and economic growth. Nine out of ten new jobs worldwide are created by small businesses, and we need nearly 3,3 million jobs every month in emerging markets by 2030 to absorb the growing workforce. Lack of access to finance is one of the biggest hurdles small businesses face that prevent them from growing and creating jobs.
A joint report by IFC and the SME Finance Forum, has found that 65 million enterprises, or 40 percent of formal micro, small and medium enterprises (MSME) in developing countries, have an unmet finance need of $5.2 trillion a year. This gap is larger than previously estimated.
IFC Vice President and Treasurer Jingdong Hua said “Providing access to finance for MSMEs is a strategic priority for IFC, but we alone cannot solve the problem. The private and public sector can better address the issue if they have better insights about the magnitude and nature of the finance gap as this comprehensive study provides.”
The results were presented at the Global SME Finance Forum held in Berlin, Germany, on November 1-3. A record number of about 500 participants from 250 institutions and 80 countries gathered at the forum to discuss impactful and innovative ways to address the MSME finance gap. The SME Finance Forum helps banks, fintechs and development banks learn from each other, link to new business and partnership opportunities, and lead in the industry-policymaker dialogue.
“We are delighted to be in Germany, in the year it hosts the G20, and appreciate Germany’s long-standing support for small businesses. This is our largest and most diverse event ever, and participants have brought along new knowledge, and ideas on how to tackle this $5.3 trillion formal MSME gap in developing countries”, said Matt Gamser, CEO of the SME Finance Forum.
IFC and McKinsey & Company conducted the first comprehensive assessment of the global MSME finance gap in 2010 and assessed the gap at $2 trillion at an aggregate level. The report, which presents new data points compiled by the SME Finance Forum and analyzed by IFC’s research units, focuses on data points from 128 countries, both from the demand and supply side. This has allowed for more accurate, actionable country-level estimates of the gap.
The World Bank Group has taken on an ambitious goal of universal financial inclusion by 2020. IFC is providing investments and advisory services to financial intermediaries catering to small businesses, and promotes the use of credit bureaus and collateral registries, as well as financial technology. In 2016, 304 of IFC’s financial institution clients made 62 million loans to MSMEs valued at $412 billion.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org
About the SME Finance Forum
The SME Finance Forum works to expand access to finance for small and medium businesses (SME). The Forum operates a global membership network that brings together more than 140 financial institutions, technology companies, and development finance institutions to share knowledge, spur innovation, and promote the growth of SMEs. Established in 2012, the SME Finance Forum is managed by IFC. For more information, visit www.smefinanceforum.org