Washington D.C., April 20, 2012—IFC,
a member of the World Bank Group, today announced a $200 million investment
in the new Global SME Finance Facility, the first global platform of its
kind to blend donor funding with funding from international development
institutions to expand lending to small businesses in emerging markets.
The United Kingdom’s Department for International Development (DFID),
with an investment of $63 million, is the facility’s first donor. The
facility will support high-impact projects with higher risk profiles, such
as in conflict-affected areas of Africa and South Asia, women-owned businesses,
and those engaged in sustainable-energy and climate-change activities.
It is expected to fund about 600,000 small businesses—a quarter of which
will be women-owned—over its 10-year lifetime.
Lars Thunell, IFC Executive Vice President and CEO, said, “Small and medium
enterprises are a vital engine of job creation in developing countries.
Yet they face a huge financing gap—especially in Africa, where SMEs need
three times more funding than is currently available. This facility will
help narrow the gap, creating opportunity for entrepreneurs who need it
Andrew Mitchell, U.K. Secretary of State for International Development,
said, "We have no chance of defeating global poverty unless we unblock
commercial lending and allow entrepreneurs the chance to thrive in some
of the most neglected parts of the world. Entrepreneurs don’t want handouts.
They want opportunities to help them pull themselves out of poverty. To
do this, they need investment to build their businesses and create stable
jobs. Using expert banking knowledge and new technology we will be able
to kick start the engine of growth."
By blending funds from DFID and other anticipated donors with commercial
funds from international financial institutions, the facility aims to reduce
the risks and costs of lending to small and medium enterprises (SMEs) by
sharing risks with banks, improving their ability to identify and underwrite
SMEs, and strengthening critical financial infrastructure. DFID will also
provide $52 million for an advisory component to strengthen the business
environment, develop financial infrastructure and commercial banks’ capacity
for SME financing. DFID will provide $4 million for grants to winners of
the G-20 SME Finance Challenge and for operational support of the Global
SME Finance Forum, a knowledge Web-platform.
The facility will be a global platform for international development institutions
to collaborate to address the SME finance gap in developing markets. It
reflects the importance placed by IFC on small and medium businesses and
responds to the G-20 call for an improved financing framework for SMEs
in developing markets.
IFC and other development institutions will invest a combined $600 million
through the facility in the first phase, of which $200 million is from
IFC’s own account. Over time the facility could grow to $1.8 billion with
funds from additional development institutions and donors.
Over the last 10 years, IFC has played a significant role in expanding
access to finance for SMEs and has worked in an advisory capacity to the
G-20. IFC provides investment and advisory services to SMEs in more than
80 countries and focuses on every phase of SME development—investment-climate
reform, building management skills, access to finance, and access to markets.
IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector. We help developing
countries achieve sustainable growth by financing investment, providing
advisory services to businesses and governments, and mobilizing capital
in the international financial markets. In fiscal 2011, amid economic uncertainty
across the globe, we helped our clients create jobs, strengthen environmental
performance, and contribute to their local communities—all while driving
our investments to an all-time high of nearly $19 billion. For more information,