MSME Finance Gap - Assessment of the Shortfalls and Opportunities in Financing Micro, Small and Medium Enterprises in Emerging Markets

M. Bruhn, M. Hommes, M. Khanna, S. Singh, A. Sorokina and J. S Wimpey | IFC

Micro, Small and Medium Enterprises (MSMEs) represent a significant part of the world economy, and are one of the strongest drivers of economic development, innovation and employment. Access to finance is frequently identified as a critical barrier to growth for MSMEs. A growing body of literature has highlighted the extent to which MSMEs are credit constrained across developing countries — including the importance of relieving this constraint to achieve higher growth. Creating opportunities for MSMEs in emerging markets is a key way to advance economic development and reduce poverty. In this regard, it is also one of the major priorities of the World Bank Group and other development institutions around the globe. (...) This research estimates that there are 65 million formal micro, small and medium enterprises that are credit constrained,6 representing 40 percent of all enterprises in the 128 reviewed countries. Ostensibly, in comparison to the previous IFC estimate of the MSME finance gap, the level of the overall gap is larger. However, the increase in the estimate of the gap is primarily driven by changes in the methodology.

Access to Finance, SME Finance & Leasing
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