IFC Launches $8 Billion MSME Finance Platform to Support Small Businesses

New Delhi, Jun 3 (KNN) The International Finance Corporation (IFC), a member of the World Bank Group, announced the launch of an USD 8 billion MSME Finance Platform aimed at boosting financing for micro, small, and medium enterprises (MSMEs) on Tuesday.

The MSME Finance Platform will provide a financing package of up to USD 4 billion directly from IFC to financial service providers that prioritise lending to MSMEs, especially those owned by women or focused on agriculture and climate solutions.

The Platform utilises an innovative approach to catalyse additional private capital through credit enhancements like a Catalytic First Loss Guarantee.

These enhancements are projected to mobilise an extra USD 4 billion in MSME financing from participating lenders, doubling the program's overall impact to USD 8 billion.

"MSMEs are the backbone of most developing economies, yet access to financing remains a significant barrier hindering their potential," said Makhtar Diop, Managing Director of IFC. "This new platform directly addresses these challenges by empowering financial institutions to extend vital support to these critical businesses."

Despite comprising over 90 per cent of firms globally and generating 60-70 per cent of employment and 50 per cent of GDP on average, a USD 5.7 trillion financing gap persists for MSMEs worldwide according to the SME Finance Forum.

In emerging markets specifically, robust MSME sectors are essential drivers of economic growth, job creation, and poverty reduction.

Recent crises have weakened many financial institutions' ability to meet stringent lending standards, leading to tightening credit conditions that disproportionately impact MSMEs.

As the largest development finance institution focused on private sector development, IFC aims to leverage its risk capital through this platform to catalyse increased MSME lending.

The International Development Association's Private Sector Window will provide up to USD 100 million to derisk the platform's activities in low-income countries.

Additional funding from IFC's SME Finance and Women Entrepreneurs facilities will further incentivise lending to agricultural businesses and women-owned MSMEs respectively.

(KNN Bureau)