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IFC and Small and Medium Enterprises
At a Glance
 Small and medium enterprises (SMEs) account for about 90 percent of businesses and more than 50
percent of employment worldwide. SMEs continue to be engines of job creation and economic
growth following the global financial crisis. Creating opportunities for SMEs in emerging markets
is a key way to advance development and reduce poverty, and it is a strategic priority for IFC.
 Access to financial services for SMEs remains severely constrained in many emerging markets in the
wake of the global financial crisis. Even as liquidity is restored to financial institutions, lending
volumes remain depressed. The unmet credit needs of the SMEs in the formal sector in emerging
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markets are estimated between $900 billion and $1.1 trillion. The World Bank Group works with
private sector partners to improve access to finance and to expand business services for SMEs. The
World Bank Group also works with governments to create a better investment climate for SMEs.
 IFC has a leadership role in SME finance, as the technical advisor for the G-20 and through its
innovative products and services that support SMEs in emerging and frontier markets.
 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.
What IFC is Doing
 SMEs are key drivers of competition, growth, and job creation, particularly in developing countries. In
these countries, up to 80 percent of economic activity takes place in the informal sector. Barriers to
SME entry into the formal sector include excessive bureaucracy and regulation. IFC, through its
programs, promotes reforms that support the private sector and helps remove barriers to SME growth
in the formal sector.
 Increasing access to finance for SMEs is best achieved by increasing the depth and breadth of local
financial markets and boosting competitiveness of the private financial sector. To support this, IFC
invests in and provides advice to financial intermediaries to help expand their services to SMEs.
 IFC focuses on SME development in low-income and frontier countries. IFC has worked with clients
in challenging and remote environments such as Chad, Guinea, and remote areas of India. More than
70 percent of IFC Advisory Services portfolio consists of projects that work with financial
intermediaries to increase SMEs’ access to financial services in the developing world.
 IFC is a technical advisor to the G-20 on SME finance. This includes providing leadership to the
Global Partnership for Financial Inclusion and managing the global SME Finance Innovation Fund
that was announced by the United States’ President at the G-20 meeting in Seoul in 2010. The fund
provides policy recommendations to increase access to finance for SMEs in a sustainable and
scalable manner, and promotes new ways to deliver financial services to SMEs.
Results
 By December 2013, IFC’s SME loans made by SME Banks totaled 4.4 million, for a $240.8 billion
outstanding portfolio.
 In FY13 our trade finance and working capital support for SMEs was $1.7bn.
 As a leader in SME finance, IFC provides investment and advisory services to SMEs in over 80
countries. Through the SME Finance Initiative framework, which provides advisory support and
financing to banks targeting SMEs in under-served markets, the IFC launched the Global SME
Finance Facility, a global platform that blends donor funding with funding from international
development institutions to expand lending to small businesses in emerging markets, and the SME
Finance Forum, an online hub for data, research, and best practices.
 IFC recently launched a number of SME finance initiatives:
o The SME Finance Initiative, launched in 2011, is a catalytic investment and technicalassistance platform that provides advisory assistance to banks targeting SMEs and allows for
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According to research conducted by IFC-McKinsey (2010)
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financing to banks to help them mitigate the risks of moving into more challenging and
underserved markets.
o Responding the G-20’s call for action to bridge the trillion dollar finance gap faced by SMEs,
IFC announced a $200 million investment in the Global SME Finance Facility in April 2012.
The first-of-its kind facility mobilizes funding from donors, international finance institutions and
the private sector, to help banks de-risk and scale up SME lending. The facility targets SMEs
that don’t have access to finance, including women-owned SMEs, agriculture and climaterelated businesses and SMEs in fragile states. The Facility aims to reach about a million
SMEs in difficult and low-income markets over 10 years, generating jobs and growth in
places that need it the most. The United Kingdom’s Department for International
Development (DFID) was the facility’s first donor, and the EIB is now a partner in the Facility
having committed $100 million to support risk sharing facilities in Africa.
o The Facility already has about 61 active investment and advisory projects, in 22 countries
and has a particular focus on SMEs in fragile and conflict-affected situations and on womenowned SMEs. With this DFID funding, the Facility has been able to extend finance
entrepreneurs in Nigeria in partnership with Coca Cola, to farmers in Tanzania, and SMEs in
Cote D'Ivoire and India among many others.
o In 2012, as part of IFC’s work with the Global Partnership for Financial Inclusion of the G-20,
IFC launched the SME Finance Forum, a Web portal featuring news, events, publications,
success stories, and expert interviews on SME finance. This multi-stakeholder initiative is
funded by the United Kingdom, Korea, and the Netherlands.
With the support of the G-20, IFC produced a number of publications on SME Finance:
(i) Stocktaking Report in SME Finance, (ii) SME Finance Policy Guide, (iii) Strengthening Access to
Finance for Women Owned SMEs in Developing Countries, (iv) Scaling Up Access to Finance for
Agricultural SMEs, (v) 2012 the Best-in-Class Guide in Customer Management in SME Banking,
among others.
IFC is also developing a supply chain approach to work with leading global corporations on better
SME performance and sustainability practices through their supply chains, and innovative solutions to
strengthen access to finance for SMEs within the supply chain.
Updated October 2014.
Media Contact:
In Washington, D.C., John McNally, [email protected], +1-202-458-0723
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