The credit freeze and the crisis of confidence unleashed by the global financial crisis has constricted bank lending, resulting in limited or no access to working capital for the SME sector. And without being able to access capital markets directly, SMEs are not only competitively disadvantaged relative to larger firms but also cut off from growing their businesses.

In response to the governance challenges posed by the financial crisis, the Global Corporate Governance Forum is helping to build the capacity of national and local institutions that work to improve board competencies and directors skills in emerging markets, with an emphasis on risk management and decision-making capabilities in times of crisis. Local organizations with local capacity are better positioned to deliver corporate governance services on a sustainable basis.

In Senegal and Malawi, for example, the Forum is building the capacity of newly established institutes of directors, while in Kenya and Zambia it is strengthening the skills and capacity of seasoned and well established corporate governance centers. Mr. Patrick Chisanga, an entrepreneur and past President of the Institute of Directors of Zambia, observes that “there is no doubt that a strong correlation is emerging between good corporate governance practices and the levels of economic development being attained on the African continent.” The Forum’s approach builds on a strong record of developing local partnerships and local ownership.

Restoring confidence and trust in the financial system—particularly through well-run banks buttressed by credible corporate governance practices—is a fundamental step to revitalize the SME sector. The recognition is that good corporate governance leads to well-run businesses, and better companies to better societies.

For more information about the Global Corporate Governance Forum, visit http://www.ifc.org/gcgf