Investing in SMEs in Frontier Markets

SME Ventures Platform

Small and medium enterprises (SMEs) are critical to economic development in emerging markets. Often referred to as the “missing middle,” they play a key role in fostering economic growth and job creation. In fragile and conflict-affected situations (FCS), SMEs make up 85 percent of registered companies and employ 60 percent of the workforce. Despite their potential, SMEs in these markets are often constrained by the lack of access to capital and face a mismatch between available funding and their specific financing needs.

To help address this critical funding gap, IFC established the SME Ventures Platform in 2008. The Platform invests in private equity funds - often run by first-time or established local investment managers - which provide equity and mezzanine financing to high-growth SMEs in IDA-eligible countries and fragile and conflict-affected situations. In addition to providing capital, the SME Ventures Platform provides its fund managers with access to networks, training, advisory services, and market expertise. This support helps build a lasting base of local fund managers who can sustain private equity activity in their markets over successive funds.

The SME Ventures Platform continues to be a thought leader in the SME financing space as the founding host and organizer of the SME Ventures Forum, which brings together a global network of fund managers and investors interested in supporting high-growth SMEs in frontier markets. The forum provides a unique platform to analyze market trends, share lessons learned, and explore challenges and opportunities that SMEs face in some of the world’s most challenging markets.