For Sione Tau, a Tongan who picks strawberries in New Zealand, sending money back home was often complicated and expensive: he had to withdraw cash from his bank, negotiate with a remittance agent, and pay a high fee before his wife, back in Tonga, could access the funds.
The Ave Pa’anga Pau (“Send Money Securely”) remittance service, developed by IFC and the Tonga Development Bank (TDB), has changed that. This secure, mobile-based system transfers funds from bank accounts in New Zealand to bank branches and savings accounts in Tonga, making life easier for overseas workers like Tau. About half of the Tongan seasonal workers based in New Zealand now use this system. IFC and TDB are working to expand the voucher system for Tongans living in Australia.
Access to basic financial services — a bank account, a mortgage, an insurance policy, or in Tau’s case, a means to send money home — is essential for economic growth. It enables people and businesses to build assets, increase income, and reduce financial risks. Yet about 1.7 billion adults lack basic bank accounts, and around 200 million small and medium enterprises (SMEs) in developing countries lack financing.
IFC provides investment and advice to expand access to finance for millions of individuals and micro, small, and medium enterprises (MSMEs) — working with financial institutions and governments to achieve impact. In FY19, we advised 87 financial institutions on ways to expand access to finance. Our clients provided more than $230 billion in financing for MSMEs.
Enabling access to finance for SMEs was also behind IFC’s $100 million subordinated loan to Equity Bank Kenya. The loan will enable the bank to expand its lending to SMEs and climate-finance to save costs and support renewable energy, green buildings, energy efficiency, and climate-smart agricultural projects.
In the Kyrgyz Republic, we invested $8 million in a new private equity fund from Highland Capital, an investment management firm, to help expand access to finance for SMEs. The financing package included $4 million for IFC’s own account blended with $4 million from the IDA Private Sector Window. The fund will provide critical growth capital to businesses in services, agricultural processing, health, education, telecommunications, media, and technology.
Our FY19 report The Unseen Sector: A Report on the MSME Opportunity in South Africa, examines South Africa’s small-business landscape and recommends how to expand opportunities for MSMEs. Findings feed into the IFC SME Push Program, which will channel up to $3 billion over the next five to seven years to increase lending to small South African businesses and create jobs.