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23 B.

Enhancing access to finance and investment

4.5

Expanding access to finance for SMEs. Although it can only meet a limited portion of the SME funding gap, the IDB Group will continue to target micro, small and mediumscale firms through the provision of financial and technical assistance resources, as well as mobilization of private lending that complements IDB’s lending. As part of the GCI-9 deliverables, VPS (with support from VPP) has prepared Guidelines to support SME finance and development. These guidelines support IDB operational work by describing tools and techniques to improve the design, implementation and evaluation of SME projects. IDB Group efforts in the SME space will also draw upon the extensive experience of the IIC27, the indirect lending experience of SG operations, NSG experience in onlending through private FIs, as well as new approaches developed by MIF and OMJ. At the same time, the IIC, MIF, OMJ and SCF can benefit from the PSD work that targets SMEs, thereby leveraging synergies and creating a virtuous cycle among these activities.

4.6

In terms of IDB financed projects, PSD will continue to provide global multisector credit and financial sector operations that ultimately enhance access to financial services by SMEs. Other PSD interventions to stimulate direct private sector lending include improving financial system regulation, property registries, creditor rights protection, secured transactions frameworks, and enhanced credit information systems28.

4.7

PSO operations will continue to target direct and indirect funding for SMEs and fill funding gaps not met by private financial intermediaries by offering longer term loans and riskier products such as subordinated debt and, when appropriate, financing to support development equity. The IIC will continue to be the primary window to provide direct loans, guarantees, technical advisory services and equity financing to SMEs. The IIC will also continue to provide indirect financing to SMEs through local financial institutions. The IIC and OMJ will collaborate in providing support to SMEs with base of the pyramid models. SCF also serves the SME market via local financial institutions, by targeting under-served markets. The MIF will continue its efforts to reach the micro and small enterprise market not only through the provision of grants to stimulate investment and lending in this sector, but also through the promotion of mainstreaming of micro and small enterprise lending and financial services through banks, microfinance institutions and other financial intermediaries, as well as investments in and capacity building of venture capital funds.

4.8

An additional means to supply funding to SMEs is through channel finance, which is an integrated solution that bundles several players in an industry supply chain and provides the financing for the entire supply, inventory and sales cycles. The underlying ―soft assets‖

27

The IIC was created specifically to promote development through the private sector with a mandate focus on SMEs. IIC’s stated long- term vision of ―Think SME, Think IIC‖ is included in the IIC 2011-2013 Business Plan approved by the IIC Board of Executive Directors.

28

See ―IDB Institutions for Growth and Social Welfare‖ and ―SME Guidelines‖ for a more detailed range of examples of PSD activities and interventions.

private sector development strategy: fostering development through the private sector  

this strategy document, which was expanded and edited based on comments received through the two periods of the public consultation process,...

private sector development strategy: fostering development through the private sector  

this strategy document, which was expanded and edited based on comments received through the two periods of the public consultation process,...

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