Boosting SME Finance for Growth : The Case for More Effective Support Policies
This report offers strategic and actionable guidance to policymakers in strengthening their access to finance policies for small and medium enterprises (SMEs). This report emphasizes the need to improve the enabling environment for SME debt and equity financing. It outlines a roadmap of eight key actions to guide policymakers in achieving this. While such reforms are necessary, they are often insufficient to fully address SME financing constraints. Targeted financial programs thus remain essential to bridge the financing gaps effectively. This report outlines seven actions to improve the design and implementation of these interventions to maximize their impact and the effective use of public funding. This report also underscores the importance of a tailored approach to address the distinct challenges faced by specific SME segments, particularly those of women-owned (and led) SMEs, SMEs in agriculture, SMEs in fragile and conflict-affected states, and those seeking financing for climate change adaptation and mitigation.
G20 Global Partnership for Financial Inclusion: Action Plan for MSME Financing
Summary
The G20 Global Partnership for Financial Inclusion (GPFI) Action Plan for Micro, Small, and Medium enterprises (MSME) Financing is a call to action to intensify the efforts of G20 and willing non-G20 countries to close the financing gap for MSMEs.
MSMEs represent a significant share of economic activity and capture a large share of employment. However, MSMEs continue to have difficulties accessing finance. The credit gap for emerging market and developing economies (EMDEs) was estimated at $5.7 trillion in 2019, with the gap for Women-owned MSMEs representing 34% of this amount. Addressing this gap will not only support MSME growth and resilience but also boost national economies and enhance countries’ abilities to meet the sustainable development goals.
The Action Plan identifies key enablers of MSME financing, such as fintech, and calls on governments to implement a robust enabling environment for MSME financing that can address the ongoing challenges frictions, as well as recommendations to improve the effectiveness of financial interventions and mobilization of private financings.
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Business Ready (B-READY) 2024
Business Ready (B-READY) 2024 report assesses the regulatory framework and public services directed at firms, and the efficiency with which regulatory framework and public services are combined in practice.
OECD: Financing SMEs for sustainability - Drivers, Constraints and Policies
The series provides comparative evidence and analysis on SME and entrepreneurship performance and trends and on a broad range of policy areas, including SME financing, innovation, productivity, skills, internationalisation, and others.
IFC Hails G20 Declaration’s Emphasis on Digital Public Infrastructure, Says Key for SME Expansion
New Delhi, September 15, 2023 – IFC Vice President for Industries, Mohamed Gouled, currently on a two-day official visit to India, has commended India's leadership at the G20 for its strong emphasis on the significance of digital public infrastructure (DPI) in achieving financial inclusion.
"This formal recognition that technology must be used for catalyzing the growth of small and medium-sized enterprises (SMEs) can prove to be a watershed moment in creating transformative partnerships between the G20 countries and beyond," said Mr. Gouled.
The G20 leaders, on September 9, adopted the "G20 Framework for Systems of Digital Public Infrastructure (DPI)", a voluntary framework, as part of the Delhi Declaration. DPI includes digital networks that offer essential services such as identification, payments, and data exchange, aiming to bring underserved populations into the digital ecosystem.
IFC, a member of the World Bank Group, has been an implementing partner for G20 Global Partnership for Financial Inclusion (GPFI). Under the India Presidency and the current G20 GPFI Financial Inclusion Action Plan, IFC was responsible for delivering a report that aims to promote innovative access to digital financing. The report is set to be published next week.
Addressing the SME Finance Forum 2023 in Mumbai on Thursday, Mr. Gouled recalled his sojourn to India for higher studies in the 1980s, noting the economic transformation of the Indian economy since then. He particularly highlighted the transformative impact of digital technology in many countries, such as India's Aadhaar, Türkiye's FAST system, and Singapore's MyInfo, collectively referred to as Digital Stack.
Mr. Gouled highlighted how SMEs have helped propel economic growth and innovation, particularly in developing nations. He said DPIs can serve as a catalyst for SME financing, fortify financial markets, and promote inclusion.
SMEs are engines of growth, but the lack of financing is a key challenge in many developing countries. In India, SMEs face a financing gap of over $221 billion, according to the SME Finance Forum. In developing countries, he said, the wide financing gap for SMEs not only prevents them from further growth, but also delays their digital transition.
“IFC's supports smaller firms in digitizing their business ecosystems, partnering with entities like Bizongo in India. Over the last four years, IFC has channeled more capital into digital infrastructure than in the previous two decades, totaling over $2 billion in the last fiscal year on a global scale.”
In his capacity as the Vice President of Industries, Mr. Gouled oversees IFC's global sectoral communities of practice and leads business development with global clients to create development impacts in partnership with the private sector in client countries. During his India visit, he met with several industry leaders and discussed ways to mobilize for investments to support the private sector in the country.