G-20 SME Finance Challenge: OVERVIEW


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Challenge Overview

The Group of 20 and Ashoka Changemakers, with support from the Rockefeller Foundation, have launched an online competition to find the best models worldwide for public-private partnerships that catalyze finance for small and medium enterprises (SMEs). The G-20 SME Finance Challenge, the first ever competition launched by the G-20, is a unique financial inclusion effort aimed at giving small entrepreneurs a chance to grow their businesses.

Challenge Background

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 their 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.
At its last annual meeting 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 for the best proposals to finance SMEs on a sustainable and scalable basis. The goal of the Challenge is to identify catalytic and well-targeted interventions to unlock finance for SMEs. Maximizing leverage of scarce resources is at the core of the Challenge.
The G-20 is collectively committed to mobilizing the funding needed to implement winning proposals from development banks and interested bilateral donors. Canada has pledged $20M to scale-up the competition‘s winning solutions. For the United States, the Overseas Private Investment Corporation (OPIC) has indicated an intention to offer project support (financing and insurance) in concert with U.S. private investment. The following institutions have all expressed their support for implementing scalable and sustainable SME financing proposals, including those from the Challenge, in partnership with the private sector: 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.
The form of funding available will depend upon the requirements of winning proposals and may include grants for technical assistance or capacity-building for financial institutions, risk sharing or first-loss capital, mezzanine capital, or investment capital.



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