The G-20 SME Finance Challenge

Competition Information

Competition News

The G-20 has just committed more than one-half billion dollars to support the winners of the G-20 SME Finance Challenge. Pres. Barack Obama, Korean President Lee Myung-bak, and Canadian Prime Minister Stephen Harper congratulated the winners in person and announced this stupendous funding commitment at the closing of the G-20 Seoul Summit.

The winners of the G-20 SME Finance Challenge were present at the G-20 Seoul Summit. They are also invited to attend an SME conference in Cologne, Germany on November 15-16, 2010.

The G-20 SME Finance Challenge Media Center is filled with story leads and other news about this initiative.

 

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Welcome Letter

Dear Changemakers Community,

Small and medium enterprises (SMEs) play a major role in economic development, particularly in emerging economies. SMEs are the single largest contributor to employment and job creation, and account for a significant share of GDP around the world.

Yet lack of access to finance is a major obstacle to these firms’ growth. It is estimated that less than 20 percent of small firms in low-income countries have access to credit. SMEs are often too small to attract commercial bank or investor interest, but too large to benefit from microfinance products. To date, few scalable solutions to support this “missing middle” tier of businesses have been found.

In Pittsburgh, Leaders of G-20 countries called for a focus on this problem as a key means of expanding opportunities and creating jobs for the poor. They committed to launch the SME Finance Challenge – a call to the private sector to put forward its best proposals for how public finance can maximize the deployment of private finance on a sustainable and scalable basis. The goal of the Challenge is to identify catalytic and well-targeted public interventions to unlock private finance for SMEs. Maximizing leverage of scarce public resources is at the core of the Challenge.

Interventions could take a variety of forms, including policy or regulatory changes, strengthening market infrastructure, capacity-building assistance for SMEs or those financing SMEs, or public-private risk-sharing initiatives. The aim is to: (1) identify the most successful pilot projects, (2) scale them up, and (3) spur their wider adoption by a broad range of private and public finance providers.

Up to 15 submissions will be selected as winners. Challenge winners representative of all regions (Africa, East Asia and the Pacific, Europe and Central Asia, the Western Hemisphere, Middle East and North Africa, and South Asia) will be invited to the November 2010 G-20 Summit in Korea to be recognized for their innovative ideas. Winners will then be connected with donors and investors at an SME conference in Germany following the Korea Summit.

If you win this Challenge, the G-20 will work with you to help implement your proposal. The G-20 is collectively committed to mobilizing the public share of the funding needed to implement winning proposals from development banks and interested bilateral donors. IFC and the World Bank, the Asian Development Bank, the Inter-American Development Bank Group, the African Development Bank and the European Bank for Reconstruction and Development have all indicated their support for implementing scalable and sustainable SME financing proposals, including those from the Challenge, in partnership with the private sector.

The form of funding available will depend upon the requirements of winning proposals, and may include grants for technical assistance or capacity-building, risk sharing or first-loss capital, mezzanine capital, and investment capital.

We thank you for your time and look forward to reading your proposals.

Guidelines and Criteria

The G-20 SME Finance Challenge is open to all private sector participants, welcoming proposals from private financial institutions, private investors and companies, socially responsible investors, foundations, and civil society organizations. Proposals may be submitted as collaborations among eligible organizations. Private sector participants are welcome to enter solutions that reflect private and public sector collaboration. Any entity (and its affiliates) involved in the judging process is not eligible to submit a proposal.

All proposals received from eligible participants will be considered, provided they:

  • Reflect the theme and objectives of the G-20 SME Finance Challenge;
  • Demonstrate efficient solutions to leverage public interventions to maximize private financing for SMEs;
  • Demonstrate success and sustainability in practice;
  • Demonstrate impact in at least one of the six regions (Africa, East Asia and the Pacific, Europe and Central Asia, the Western Hemisphere, Middle East and North Africa, and South Asia); and
  • Are submitted in English, Spanish, French, or Portuguese.

Assessment Criteria

The winners of the G-20 SME Finance Challenge will be those that best meet the following criteria:

Innovation: The entrant must describe a systemic and/or transformational solution that is not now widely applied but which has demonstrated potential for unlocking large-scale private financing for SMEs. Proposals should target SMEs with a focus on the small end of the spectrum.

Leverage: Winning entries will propose solutions that maximize the leverage of scarce public resources in catalyzing private finance.

Social and Economic Impact: Proposals must have a track record with measurable results. They must have a clear, measurable financial access impact, demonstrated by results from pilot or other empirical testing. They should credibly estimate the number of underserved SMEs that could be reached over a designated time frame, the volume of private SME finance that could be catalyzed, the amount of finance that would be available to individual targeted SMEs, the new markets and areas to be served by the proposal, and the potential for job creation (where possible).

Sustainability and Soundness: Proposals must credibly demonstrate their potential to be scaled up and sustained over the long-term as public support is phased out. Proposals must have a realistic time frame for implementation. If public finance is required to implement the proposal, it must be suited to the technical, legal, and financing capacity of the international financial institutions (e.g. The World Bank and regional development banks) and bilateral financing institutions (DFIs). Proposals must also meet policy and regulatory standards for safe and sound financial systems and for the prevention of money laundering and terrorist financing.

Award Structure

Early Entry Prize: The best entry submitted by 5:00 PM EDT, August 6, 2010 won a US$1000 prize awarded by Ashoka Changemakers. Being an Early Entry Prize winner does not preclude you from winning the challenge in any way, or guarantee finalist status-all entries will be equally evaluated per the Changemakers criteria at the completion of the entry period.

G-20 SME Finance Challenge Winners: On October 27, the panel of expert judges will select 12-15 winners from the entire Challenge. Challenge winners, including at least one solution from each of six regions (Africa, East Asia and the Pacific, Europe and Central Asia, the Western Hemisphere, Middle East and North Africa, and South Asia), will be invited to the G-20 Leaders Summit in Korea November 11-12, where they will showcase their ideas.

The G-20 will work with the winners to help implement their proposals. The G-20 is collectively committed to mobilizing the public share of the funding needed to implement winning proposals from development banks and interested bilateral donors. IFC and the World Bank, the Asian Development Bank, the Inter-American Development Bank Group, the African Development Bank and the European Bank for Reconstruction and Development have all indicated their support for implementing scalable and sustainable SME financing proposals, including those from the Challenge, in partnership with the private sector.

The form of funding available will depend upon the requirements of winning proposals, and may include grants for technical assistance or capacity-building, risk sharing or first-loss capital, mezzanine capital, and investment capital.

People's Choice Winners After the judges select the 12-15 winners, the Changemakers online community will vote for three "people's choice winners." Voting will take place October 29 - November 8, 2010 and the three winners with the most votes will be recognized on Changemakers.com and at the Korea Summit.

Disclaimer-Compliance with Legal Restrictions

Ashoka complies fully with all U.S. laws and regulations, including Office of Foreign Assets Control regulations, export control, and anti-money laundering laws. Any grants will be awarded subject to compliance with such laws. Ashoka will not make any grant if it finds that to do so would be unlawful. This may prohibit awards in certain countries and/or to certain individuals or entities. All recipients will comply with these laws to the extent they are applicable to such recipients. No recipient will take any action that would cause Ashoka to violate any laws. Additionally, Ashoka will not make any grant to a company involved in the promotion of tobacco use.

Judges Panel

Elizabeth Wallace

Director and President, Frontier Finance International

Kurt Hoffman

Former Director, Shell Foundation

Mutle Mogase

Co-founder and Executive Chairman, Vantage Capital Group

Nachiket Mor

Chairman, Sughavazhvu Healthcare

Nancy Lee

General Manager, Multilateral Investment Fund

Stewart Paperin

Executive Vice President, Open Society Institute Soros Foundation

Thorsten Beck

Professor of Economics, Tilburg University

Yongbeom Kim

Director General of Global Financial Architecture Bureau, Presidential Committee for the G-20 Summit