Small and medium enterprises (SMEs) in emerging markets face a trillion-dollar financing gap. Expansion of the SME sector is critical to boosting employment and reducing poverty in low income countries. Yet SME owners in these markets face significant challenges in building their businesses, from the high cost of doing business and the pervasiveness of the informal economy, to a lack of supporting infrastructure and skilled capacity. However, at the top the list of challenges for SMEs in most emerging markets is a severe lack of access to finance, which can greatly limit their ability to invest in growing their businesses and hiring additional employees.
This is particularly true for women-owned businesses. Women entrepreneurs are poised to transform their local economies and contribute significantly to the global economy. However, women face numerous challenges to accessing markets, financing, owning and growing a business, including access to capital and technology, lack of networks and knowledge resources, limited market linkages, challenging social and cultural norms, as well as legal and structural barriers.
Although banks in some markets are starting to move into SME lending, some segments are still underserved. This includes SMEs in fragile and conflict-affected markets, women-owned businesses, education and health-care SMEs, and firms in rural markets.
SME and Gender blended finance facilities offer guarantees to lower the risks faced by financial institutions moving into SME markets They also provide dedicated credit lines to reach specific segments—including women-owned SMEs—and performance incentives to motivate financial institutions grow their SME portfolios: