Banking on SMEs: Driving Growth, Creating Jobs

Small and medium enterprises (SMEs) face significantly more constraints than larger firms in accessing finance, particularly in emerging markets. IFC estimates that about 43 percent of formal SMEs in developing countries have an unmet financing need of nearly $4.1 trillion. Without access to finance, SMEs cannot grow and create jobs.

IFC launched the Global SME Finance Facility (GSMEF) with funding from the governments of the United Kingdom and the Netherlands, to address the reluctance of financial institutions to serve SMEs in emerging markets following the 2008 financial crisis. With GSMEF’s support, IFC has enabled financial institutions to serve SMEs, particularly SMEs that they do not normally reach, including women-owned SMEs, very small enterprises, or climate-smart SMEs.

The Banking on SMEs: Driving Growth, Creating Jobs report describes the use of Blended Finance financial instruments and targeted Advisory Services to encourage our client banks to increase their lending to SMEs. GSMEF’s analysis shows that clients who received this support increased their lending to SMEs, including to underserved SMEs such as Women-owned SMEs, at a higher rate, without experiencing higher rates of default. The report shares a story of innovation and impact, and identifies important trends and lessons, to pave the way for GSMEF’s continued success in supporting SMEs’ growth, prosperity, and ability to create jobs.