SMEs' financing gap in developing economies stands at $2 trillion, says IFC

Oct 21, 2013

The financing gap for small and medium-sized enterprises (SMEs) in developing economies remains around $2 trillion (€1.46 trillion), according to a study led by the International Finance Corporation (IFC).

The financing gap for small and medium-sized enterprises (SMEs) in developing economies remains around $2 trillion (€1.46 trillion), according to a study led by the International Finance Corporation (IFC).

The report, called "Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises", shows that over 200 million formal and informal SMEs in developing countries do not have a loan or overdraft, or have a loan or overdraft but still find access to finance
a constraint.

An estimated 80 percent of all enterprises in developing
economies - about
300 million of
them - are
informal SMEs or nonemployer firms.


“MSMEs face many obstacles in developing economies, however, access to finance remains by far the biggest obstacle to their growth to date,” said Peer Stein, Director of IFC’s Access to Finance Advisory Services.

“On average, about two-thirds of full-time jobs in developing economies are provided by such firms, therefore, urgent action is essential in meeting their financing needs," he added.

The study states that better information and data are key to
understanding
the demand and better segment the informal market. It also identifies a number of potential improvements that can significantly improve access to finance by ensuring accessibility of credit information, enabling movable collateral, and strengthening creditor rights.ADNFCR-2976-ID-801651408-ADNFCR