SMEs are the driving force of economic growth in most countries. They are crucial to the creation of dynamic, competitive, and inclusive economies. They generate jobs and support economic growth, particularly in developing markets, playing an essential role in eliminating extreme poverty and boosting shared prosperity.

Globally, SMEs represent 90% of all firms and more than 50% of employment. Formal SMEs contribute up to 40% of GDP in emerging economies. With the addition of informal firms, the entire SME sector is estimated to contribute as much as 60 to 70 % of GDP.

SMEs face significantly more constraints than larger firms in accessing finance, particularly in emerging markets. About 43% of formal SMEs in developing countries have an unmet financing need of nearly $4.1 trillion.

Climate-smart SMEs, that prioritise sustainable practices and environmental protection in their operations, are becoming a growing trend.

THE WORK WE DO ON SME INCLUSION:

• Crowd in more funds with blended finance to encourage lending to SMEs.
• Strengthen the capacity of financial institutions to target and profitably serve SME customers.
• Work with stock exchanges to deepen capital markets to provide SMEs with an alternative source of financing that can complement traditional bank loans.
• Work with financial institutions to ensure appropriate financial infrastructure is in place (e.g., credit bureaus and collateral registries), to enable private sector finance to flow to SMEs.
• Help governments strengthen existing legal and regulatory frameworks that govern credit information systems.
• Work with DFIs/governments to design relevant intervention funds/credit guarantee schemes to support SME lending.