Moderator
Bill Briggs, Former Acting Associate Administrator, US Small Business Administration
Speakers
Simon Cureton, CEO, Funding Options
Nagla Bahr, Managing Director, Credit Guarantee Corporation (CGC), Egypt
Syed Abdul Momen, Deputy Managing Director & Head of SME Banking, BRAC Bank
Background
SMEs face numerous challenges in accessing finance. These challenges are even more critical for those SMEs with green projects and therefore credit guarantee institutions can have an important role to play.
Small and Medium-sized Enterprises (SMEs), including micro-enterprises, are important engines of innovation, growth, job creation and social cohesion in high-income/emerging economies, as well as low-income developing countries. In developed and emerging economies, SMEs undertake the majority of private economic activity, and account for more than 60 percent of employment and 50 percent of GDP. In the developing countries, SMEs contribute on average to more than 50 percent of employment and 40 percent of GDP. Furthermore, they contribute significantly to broadening employment opportunities, social inclusion and poverty reduction (G20/OECD 2014).
These financing constraints and barriers to private capital have an even more decisive impact on innovative low-carbon SMEs who have developed solutions to mitigate GHG emissions as well as SMEs looking to deploy solutions to reduce their operations’ carbon intensity. SMEs developing low-carbon innovations face issues similar to those of sustainable infrastructure projects: their returns may accrue over a long-term horizon. Similarly, SMEs that can help in the adaptation to climate change must have access to finance with long horizons (Lane 2017).
Against this backdrop, this panel discussion aims to explore the role of credit guarantee institutions in promoting green finance for SMEs.
Key takeaways
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Credit guarantees are used in many developed and developing economies to alleviate the constraints facing SMEs in accessing finance.
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SMEs are more affected by credit rationing than larger companies as the cost of monitoring is higher.
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The expertise from guarantee institutions is critical in supporting the banks to identify valuable investments in growth, sustainability, and innovation.
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Credit guarantees institution has a vital role in ensuring that SMEs are becoming more resilient.
Words of Wisdom
‘Heavy Government involvement is crucial to setting up a successful credit guarantee scheme’ Nagla Bahr, Managing Director, Credit Guarantee Corporation (CGC), Egypt
