Small and Medium Enterprises
Key Driver for Growth and Jobs in South Asia
Increasing Access to Finance Facilitating Access to Markets
DONOR PARTNERS
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Promoting Inclusion and Growth
Stori es of Impa c t
Small and Medium Enterprises:
Key Driver for Growth and Jobs
in South Asia
6
Developing Competitive Promoting Inclusion and Growth
Firms in the Private Bangladesh
26
Sector Obtaining Trade Licenses,
a First Step to Starting a
Increasing Access to Finance Formal Business
Bangladesh
14 Building a Database India
28
of Clients to Improve Simplifying Tax
Lending Decisions Compliance for Small
Firms, Improving
India Business Climate
16
Helping Non-Banking
Financial Companies Nepal
30
Support Small Registering a Business
Entrepreneurs and Getting Tax
Information Online
Facilitating Access to Markets
20 32
Sri Lanka The Way Forward
IFC Helps Develop Our Priorities, Next Steps
Tourism Value Chains
Bangladesh
34 Sharing Knowledge
22
Reducing Energy and
Water Consumption
in Washing-Dyeing-
Finishing Sub-Sector
Developing Competitive Firms in the
Private Sector
Forty million new jobs need to be created in
Fifty-three percent of IFC's advisory South Asia by 2016[1] to absorb newcomers in the
portfolio in South Asia focuses on labor market. Small and medium enterprises will
micro, small, and medium enterprises be the main providers of these jobs. Improving
performance is critical to their success, making it
easier for them to operate, expand, and generate
Between 2009 and 2012, business opportunities.
●● IFC trained 233,000 IFC has a decade of experience working with small
and medium enterprises in this region, providing
entrepreneurs to be more scalable and replicable solutions throughout
efficient and productive the lifecycles of small businesses. In 2002, IFC
established the SouthAsia Enterprise Development
●● More than 150,000 small Facility to enhance performance, competitiveness,
and medium enterprises have and growth of small and medium sized firms in
Bangladesh, Bhutan, Nepal, and North East India.
received improved access to
financial services IFC provides investment and advisory services to
help small and medium enterprises through their
●● Micro, small, and medium entire life cycle - right from inception to growth and
maturity. We do this by assisting in introducing
enterprises together generated regulatory reforms, building management skills and
$15 million in revenues supporting access to finance and markets.
[1] Estimates from the World Development Report and International Labor
Organization
6
Capitalizing on Opportunities
IFC is linking firms with appropriate financial products
IFC is supporting small and medium enterprise
IFC is removing constraints to formalization
development that is linked into larger value
Creating the Right Conditions
Promoting Inclusive Growth
by introducing policy reforms
Formation phase Start-up phase
Stages
chains
of SME
development
Expansion phase Growth phase
Constant skill-building
To improve business acumen and accelerate
growth to create jobs and tap new markets
IFC’s support during various stages of
small and medium enterprise development
7
Hardworking entrepreneurs running successful smaller companies contribute to local economic growth.
However, they face a range of challenges that constrain operations and growth:
Access to Electricity Access to Finance Access to Skills
As many as 23 million Nearly 37 million micro- Limited availability of
micro-enterprises and enterprises including one million skilled labor reduces
one million small and small and medium enterprises productivity and
medium enterprises have limited or no access to operational capabilities.
lack access to reliable finance in South Asia. Micro- Entrepreneurs also lack
electricity in South Asia. enterprises face a credit gap of skills to expand and
$280 billion to $340 billion while grow their business.
it is $30 billion to $40 billion for
small and medium enterprises Access to Markets
in the region.
Access to market
opportunities has
always affected
Enabling Environment
the ability of micro,
Micro, small and medium enterprises face challenges at policy and small and medium
operational levels throughout their lifecycles. Interventions are needed, both enterprises to grow
from the government and other private sector stakeholders to create an and become more
ecosystem that nurtures them. profitable.
8
IFC’s Lighting Asia/India Program aims to provide safe, clean, and affordable off-grid electricity to 2 million people in rural India. The
governments of United States and Italy are co-funding this initiative.
9
IFC focuses on selectively
addressing the challenges
of access to finance,
markets and inclusion in
South Asia. It leverages
its global experience in
improving investment
climate, working with the Increasing Access to Finance
financial sector and its ●● IFC develops financial infrastructure and works with
relationships with lead leading commercial banks, non-banking financial
firms and corporations companies, and microfinance institutions in Bangladesh,
Bhutan, India, Maldives, Nepal, and Sri Lanka to help
them better serve the needs of small businesses.
●● IFC works with BRAC Bank in Bangladesh to train
its staff to use existing portfolio information to predict
customer behavior. This has improved lending decisions
and significantly reduced non-performing loans. Small
business owners benefitted from faster turnaround time.
●● IFC has supported an urban microfinance institution,
Swadhaar, to conduct market research and define its
strategy to expand into the micro-enterprise segment.
10
Facilitating Access to Markets Promoting Inclusion and Growth
●● IFC works with lead firms and market aggregators to ●● In South Asia, there are 69 million informal units;
reach a large pool of enterprises to introduce better many of them have the potential to grow. IFC
business practices, upgrade standards, and enhance works with governments to introduce reforms that
competitiveness. make it easier for small and medium firms to do
business.
●● IFC’s interventions are based on an assessment of the
performance gaps in the value chain focusing mainly on ●● IFC works in state of Bihar, India to simplify
improving managerial and technical expertise of small business tax for small and large enterprises. In
businesses. Bangladesh and India, IFC is making it easier for
businesses to obtain trade licenses.
●● Dialog, an IFC investee mobile telecommunications
company in Sri Lanka, relies on a network of 55,000 ●● In a unique eWaste recycling initiative in India,
retailers and distributors. Dialog is using IFC’s business IFC has partnered with a private sector client,
tools such as SME Toolkit and Business Edge™ to Attero, to integrate informal sector waste
increase integration within the network and improve the collectors into the formal sector.
operational efficiencies of even its smallest distributors.
11
Increasing Access to Finance
Addressing the Regional Gap
An IFC global study on small and medium
enterprise finance indicates that at least
40 percent of them in South Asia do not have
access to any institutional sources of finance.
The formal credit gap for small and medium
enterprises in the region is an estimated
$30 billion to $40 billion, with a total credit
gap of $280 billion to $340 billion, including
micro-enterprises.
Financial institutions have limited exposure
to small businesses due to a “higher risk”
perception and limited access of these
enterprises to immovable collateral.
As a result, the financial needs of small
businesses are primarily met through informal
sources of finance including moneylenders,
friends and family, and chit funds, all of which
charge significantly higher rates of interest than
formal sources.
B.D. Mundhra employs 300 people at his bottling plant, Orient Beverages, in India.
He received finance from IFC-investee Magma to expand his business.
Almost all finance currently flowing into
this sector in South Asia is debt, with little
or no equity.
IFC plays a leadership role in providing
financing, as an advisor to the G-20 and
through innovative products and services that
support small and medium enterprises in frontier
markets and low income states
12
IFC’s four-pronged approach to increase access to finance focuses on:
1. Increasing Outreach to Micro-Enterprises: IFC advises Utkarsh Micro Finance, an investee-client and a registered
microfinance non-banking financial company working in the low income states of Uttar Pradesh and Bihar in India, to
develop loan products for micro-enterprises. Utkarsh specifically serves customers that do not qualify for traditional
microfinance. IFC helps Utkarsh develop policies, systems, and pilot projects in two cities of Uttar Pradesh. Through
this, IFC estimates that Utkarsh will have the capacity to finance up to 20,000 micro-enterprises in three years.
2. Strengthening Reach, Promoting Innovation: IFC builds the capacity of commercial banks to develop tailored
products and incorporate stronger risk management to expand operations to small and medium enterprises. IFC
supports Bangladesh’s BRAC Bank to increase its business performance by using evaluation tools and sustainability
reporting in small and medium enterprise finance. IFC engages with the bank’s staff and senior managers to
strengthen evidence-based decision-making using these tools. IFC also supports National Development Bank in Sri
Lanka to strengthen lending to small firms, with an additional sub-component on agricultural lending.
3. Non-Financial Services to Foster Growth: In addition to finance, small firms need business advice, skills, networking,
and market opportunities to grow. IFC focuses on non-financial services and provides thought leadership to develop
operational tools in this area. Since 2008, ICICI Bank, India’s largest private sector bank, using IFC’s SME Toolkit online
platform to provide non-financial services and information to smaller enterprises. As of March 2013, more than 520,000
SMEs use the business directory feature making it an exciting business-to-business platform. In Sri Lanka, IFC supports
National Development Bank to establish centers that facilitate banks’ direct engagement with their small and medium
enterprise clients and provide them with tools, training, and business information to improve productivity. National
Development Bank has opened five small business centers and is in the process of opening four more.
4. Developing Credit Bureaus and Collateral Registries to Increase Transparency: IFC has partnered with the
Indian government’s central collateral registry, Central Registry of Securitisation Asset Reconstruction and Security
Interest, to expand its ambit to include movables which will address the lack of collateral needed to access credit for
small businesses that have few immovable assets. IFC will leverage its global experience with credit bureaus to grow
the use of credit information for small and medium enterprises in South Asia. This will include supporting existing
credit bureaus to increase use of non-traditional credit information (such as utility bills) to develop a comprehensive
credit picture for small firms.
13
Case Study | Bangladesh
Building a Database of Clients to Improve Lending Decisions
Bangladesh’s small and medium enterprises compiled information of 8,000 small and
are dynamic and offer a large number of medium enterprises from 64 districts.
private sector jobs. However, banks lack
access to current information about the credit Financial institutions can use this database
behavior of these enterprises that can help
●● To strengthen internal processes
make informed lending decisions.
●● Facilitate quality control
Bangladesh Bank in discussion with IFC,
decided to take on the challenge to create ●● Enable easy reporting to Bangladesh
and regularly update a comprehensive Bank thus reducing paper work
database. At the pilot stage, the database
●● Improve the utility of the database
through benchmarking
●● Develop focused strategies to target
enterprises to provide financial
services.
In addition, Bangladesh Bank can use the
data to monitor their policy-level decisions,
and improve lending to small and medium
enterprises.
Traditional method of maintaining loan payment
registers.
14
Left: Bangladesh’s textile industry employs over 3.5 million people, 85 percent of whom are women.
Right: A small enterprise that receives credit from BRAC Bank, Bangladesh.
15
Case Study | India
Helping Non-Banking Financial Companies
Support Small Entrepreneurs
India’s 14 low-income states are provides low-income housing
home to more than 300 million poor. finance, health, life, and vehicle
Many among them have promising insurance, micro, small and medium
entrepreneurial skills and just need enterprise finance, and other
someone to give them a chance. products – often to the same clients
as their needs grow.
When banks turned down
Rajasthan vegetable farmer Suvalal IFC’s $7.6 million (Indian rupees
Palsania for a loan to buy a tractor, 350 million) equity investment and
Au Financiers decided to give advisory package in 2010 and again
him one, since his cash flows and in 2012 was a stamp of approval
reputation were strong. It lent him for Au. It helped attract additional
Indian rupees 346,000 ($7,500) financing from other leading banks
for the tractor and trailer that he and a nomination for the 2011
now uses to get his produce to the Financial Times/ IFC Sustainable
market faster. Finance Awards in London.
Vehicle owners who received financing from IFC
client Magma have been able to expand their fleet. Au is a flexible non-banking IFC supports Au to better
financial company with a proven understand its target market and
credit-risk methodology. expand its reach to micro, small,
and medium enterprises and
Au serves more than 100,000 agri-allied businesses in both
clients, primarily unbanked people existing and new geographies.
in rural Rajasthan who are ready to
do something with their lives but are IFC also works with Magma
prevented from doing so as regular Fincorp, and microfinance
banks will not give them credit. institutions such as Utkarsh and
Swadhaar, to extend finance to
First-time vehicle purchasers micro and small enterprises.
are Au’s core market, but it also
16
In 2002, Girdhari Ram started his own transport company
with a loan from Au Financiers. Since then, he expanded his
business and now operates five commercial vehicles.
Suvalal Palsania got funding from Au Financiers to purchase a tractor.
17
Facilitating Access to Markets
Bridging the Gap
Through its private sector clients, IFC enhances the ability of small and medium businesses to access markets and integrate
them into value chains. IFC also facilitates their increased access to energy/power, and basic infrastructure.
1. Facilitating Access to Value Chains for Small Firms: In South Asia, and globally, large firms often rely on
a network of small businesses in their supply and distribution chains. Improving operational efficiencies and
deepening integration within the value chain are key drivers of growth. On the other hand, small businesses
struggle to access business information, training, and opportunities to grow their operations and remain
competitive. Since 2007, IFC has worked with investee client Dialog Axiata Telecom in Sri Lanka, which
relies on a network of 55,000 retailers and distributors across the country. Nearly 8,000 micro and small
retailers have been trained on business management in local languages to improve their business skills. For
Dialog, these trainings have resulted in more than $2.6 million of increased revenue from these retailers.
2. Building Management Skills of Small and Medium-sized Entrepreneurs: IFC focuses on addressing
managerial skills gap through its proprietary training and information tools such as Business Edge™ and
the SME Toolkit. These tools, adapted to local markets and languages, train small and medium enterprises
on business management skills. So far, IFC through its accredited training partner firms, has trained 16,000
entrepreneurs in South Asia with these tools. Another approach to build management capacity has been to
work at the sector level in India, where IFC has partnered with the National Institute for Entrepreneurship
and Small Business Development, a training arm of India’s Ministry of Micro, Small and Medium Enterprise
to deliver a country-wide trainer capacity building program.
3. Increasing Access to Electricity: Lack of access to electricity is the main constraint faced by both formal
and informal micro, small, and medium enterprises. Unreliable or no electricity hampers operations and
increases the cost of doing business. IFC has launched Lighting Asia/India Program, aimed at providing
safe, clean, and affordable off-grid lighting to two million people living in rural India by 2015. The program is
developing private off-grid lighting market in India across the entire value chain: manufacturing, distribution,
supply chain management, and access to finance. IFC also facilitates better access to basic infrastructure
through public-private partnerships.
18
Mahinda Malgoda,
a Sri Lankan small
entrepreneur received SME
toolkit training. He also
accesses the toolkit online
to improve business skills.
A shop owner has been able
to extend his working hours
as a result of IFC’s Lighting
Asia/India Program.
19
Case Study | Sri Lanka
IFC Helps Develop Tourism Value Chains
Historically, the tourism business in Sri Lanka The association trained small industries to
was owned by a few local conglomerates, provide consistent quality of professional
who were reluctant to partner with small services and to reach out to a larger customer
local businesses due to concerns of quality base through better marketing.
and reliability. On the other hand, small
businesses found it difficult to attract high- As a result, micro and small entrepreneurs
spending tourists due to limited marketing can now access new business opportunities
reach and poor quality of goods and services in the tourism value chain and register and
offered. formalize their businesses.
IFC focused on Hikkaduwa district in The project has, so far, led to the creation of
southern Sri Lanka, which has the highest 336 direct jobs and generated $1.1 million
concentration of small and medium firms in revenue. Around 555 small and medium
operating in the tourism sector. enterprises that provide tourism related
services, including restaurants, transport,
IFC launched the Hikkaduwa Tourism Service and traditional arts and crafts, are part
Providers’ Association in 2008 to help develop of this project.
a model that integrated small businesses into
the value chains of larger conglomerates.
20
Top left, right and bottom left: Local service providers in restaurants, transport, and traditional crafts are part of the Tourism Association
in Hikkaduwa.
21
Case Study | Bangladesh
Reducing Energy and Water Consumption in
Washing-Dyeing-Finishing Sub-Sector
IFC’s interventions to reduce use of resources To make the sector less polluting and more
like energy and water are a pioneering initiative efficient, IFC worked with trade associations,
in Bangladesh. These interventions have shown textile firms, buyers, and the government to
that it is possible to adopt higher standards of provide a 360 degree solution to ensure that
resource efficiency and also save money. the textile industry can sustain growth, and gain
a competitive advantage by working towards a
Bangladesh’s textile industry is the second largest cleaner, greener supply chain.
in the world and is the highest foreign currency
earner for the country ($19 billion in 2011). It By December 2012, IFC had worked with 18
employs over 3.5 million workers, of whom 85 washing-dyeing-finishing plants to implement
percent are women. cleaner production processes.
The washing-dyeing-finishing sub-sector of IFC’s intervention resulted in saving
the textile industry has 1,700 units that employ 1.3 million cubic meters of water per year,
200,000 workers. It is growing at 10 percent $2 million in private sector savings, and
per year. However, this sub-sector is also the reducing 32,000 metric tons per year of
second biggest polluter in the country, discharging greenhouse-gas emissions.
56 million tons of waste water, and 0.5 tons of
sludge annually. This negatively impacts the lives The program now covers 52 of the 1,700 firms in
of nearly 6 million people. the sector. Since these 52 units supply to large
international firms, their experience could have a
Washing-dyeing-finishing units use millions of transformational impact on the sector.
liters of water every year, mostly from the Dhaka
watershed where most factories are located. The
water table here is receding one meter every year.
22
IFC is helping reduce use of energy and water by promoting cleaner production technologies in Bangladesh’s textile industry.
23
Promoting Inclusion and Growth
Creating an Enabling Environment
IFC enables reforms to foster a better
business environment for small and
medium enterprises and improve
the investment climate to help them
register and become formal units.
There are 69 million informal units
in South Asia and many have the
potential to grow. However, they
lack a supportive ecosystem that
nurtures growth.
IFC is simplifying business tax
regimes in India’s Bihar state and
Nepal to make it easier for small
business to file taxes and become
compliant. Once these firms come A worker in welding industry who has access to safety equipment and
into the formal tax fold, it is easier protective gear.
for them to access loans, subsidies,
and markets.
Trade licensing simplification reforms
in Bangladesh help firms to reduce
risk, cost, time, and facilitate easier
access to information. Similarly, Nepal
uses information technology, such as
the newly-launched business license
portal, to provide information on trade
licensing to small and medium firms.
In another initiative in Bhutan, World
Bank Group’s investment climate Manohar Singh Rajawat from Dausa district in state of Rajasthan,
team, have launched an e-portal that India, struggled to earn his living as a tent house laborer in
will make it easier for businesses to 2007. Today, he runs his own tent house and owns five trucks.
obtain licenses and permits. Formalization helps small entrepreneurs grow their business.
24
Workers dismantle electronic equipment at IFC investment and advisory client, Attero Recycling's, plant in Roorkee, India. IFC-Attero have
partnered in a unique Clean e-India initiative to integrate informal sector waste collectors into a formal supply chain with access to safety
equipment and workers' rights.
25
Case Study | Bangladesh
Obtaining Trade Licenses, First Step to Starting a Formal Business
Acquiring a trade license is the time and costs for the applicant
first step to starting a business and the municipality.
– be it small or large. A large
number of entrepreneurs in Now, a trade license can be
Bangladesh find it hard to issued and renewed in half a
acquire trade licenses due to day. Earlier, it took three days
lack of information, facilitation to issue a trade license and two
fees, and the time taken to issue days to renew it.
them.
The government is now
As a result, entrepreneurs in implementing this project
rural areas operate through in three municipalities of
informal units, which limits their Bangladesh - Cox’s Bazaar,
access to finance, government Gopalganj and Hobiganj, and
subsidies, and skills to run a will conduct an assessment to
business efficiently. address all challenges before
implementing it in all 312
IFC recommended a redesigned municipalities in Bangladesh.
process to the government of
Bangladesh that eliminated
multiple reviews and defined the
roles of government officials at
municipality level and reduced
Garment factories in Bangladesh are a major
source of employment in the country.
26
Young women in Bangladesh have better job prospects as they enhance their information technology skills.
27
Case Study | India
Simplifying Tax Compliance for Small Firms, Improving
Business Climate
IFC helped the Indian state of Bihar to simplify
tax laws and procedures to reduce compliance
issues and encourage small businesses to
register as taxpayers, thus widening tax base,
and improving business climate.
With IFC’s advice, Bihar state adopted several
progressive measures such as a fixed rate
of tax for micro and small enterprises with no
routine scrutiny, online filing of returns for larger
enterprises, simplified admission of appeals, and
faster resolutions and refunds.
The project started in 2009 and by its closure
in September 2013, the project recorded a
24 percent increase in the tax payer base.
The number of tax payers filing e-returns has
increased to 22,000 (from a base of 149 in
2009). 93 percent of tax revenue is collected
electronically in Bihar now.
The number of small tax payers registered under
a special, simplified scheme for small tax payers
is at 6,800.
Mohammad Mustafa runs a bangle store in Patna, According to an appraisal by Indian Market
Bihar and does not worry about closing shop when Research Bureau, an international market
the tax authorities come for surprise checks as his research and consultancy firm, businesses
business is formally registered now. in Bihar agree that tax compliance is less
burdensome after reforms, and ease of doing
business has improved.
28
Shop owners in Patna, Bihar find it easier to do business after the introduction of a
simpler tax regime for small businessmen.
29
Case Study | Nepal
Registering a Business and Getting Tax Information Online
In Nepal, entrepreneur Jackson departments. Over 70 percent of the
Subeidi has found it easier to register licenses are issued at the central level,
a new business due to an improved and the rest at district and municipal
investment climate. In the past, he had levels. Moreover, information on these
to make repeat visits to a government business licenses was scattered across
center. Recent improvements, more than 60 websites, numerous
supported by advisory services from publications, and citizen charters of
IFC and World Bank Group, allowed multiple government agencies.
him to launch his latest start-up Hipster
Technologies quickly. Adding a new As a result, businesses had to visit
electronic database and filing system, multiple government offices and
the government’s Office of the Company websites were forced to engage
Registrar has now registered 114,000 intermediaries, and were still
companies, most of them online. unable to collect accurate and
complete information.
IFC also supported Nepal to implement
an e-portal to store business license The e-portal now provides easy
information as part of the Nepal access such as license name, purpose
Investment Climate Reform Program. of the license, territorial coverage,
issuing agency, license details, legal
Prior to the setting up of the license basis of the license, documentation
portal, small businesses in Nepal and other requirements, license
complained of limited or no access processing time, license validity period
to authentic license information. A and renewal frequency, and relevant
diagnostic study found that a total fees or charges.
of 130 different types of licenses
are issued by 41 agencies and
30
Top left: IFC’s work with Nepal’s Office of the Company Registrar has helped register 114,000 companies.
Top Right: Improved business regulations helped Nepalese entrepreneur Jackson Subeidi to register his company, Hipster Technologies,
faster.
Bottom: IFC assisted Nepal in establishing an e-portal, a one-stop platform for all license and tax information that is benefitting small
businesses.
31
The Way Forward
Our Priorities, Next Steps
IFC will continue to:
●● Increase access to finance for ●● Broaden focus on agribusiness to
small businesses by helping support small firms’ integration in
banks and microfinance the value chains of larger firms
institutions expand lending and
●● Work with local governments in
improve risk management
creating the right environment
●● Facilitate roll out of non-financial for small and medium firms to
services in India’s low income operate and grow.
states and frontier regions in
South Asia
32
IFC will continue to deepen management, and bring micro- can stay linked to market
its engagement with small enterprises into their fold. It will opportunities by being a part of
and medium enterprises in increase focus on non-financial the value chain of larger firms.
partnership with our private services and provide thought
sector clients, especially in the leadership in this sector. IFC will work with local
least developed markets in governments to simplify and
South Asia. IFC will broaden its streamline small business
interventions, with a specific registration and tax payment
IFC will help banks and focus on agribusiness, to procedures and work towards
microfinance institutions to improve the ability of small and the inclusion and formalization
increase lending to small and medium enterprises to access of smaller businesses.
medium firms, improve risk markets. Small enterprises
33
Sharing Knowledge
IFC's knowledge products in Small and Medium Enterprises
Micro, Small and Medium Enterprise Finance in India: A Research Study on Needs, Gaps and
Micro, Small and Medium Way Forward (November 2012)
Enterprise Finance in India
There are an estimated 30 million micro, small, and medium enterprises in various industries, employing
69 million people. Accounting for 45 percent of the country’s industrial output, the sector has been
growing consistently at 11.5 percent a year, higher than India’s overall economic growth. However,
inadequate financing and market linkage have not allowed these businesses to grow sufficiently. IFC’s
recent study, jointly undertaken with the Government of Japan, outlines potential interventions to
address their biggest challenge of accessing finance.
The study estimates that financial institutions meet only one-fourth of the financing demand of micro,
small, and medium enterprises in India, noting that a sizeable part of this huge unfulfilled opportunity
A Research Study on Needs, Gaps and Way Forward (November, 2012)
is viable. The overall finance shortfall in the micro, small, and medium enterprise sector is around
In Pa r t ne r s hip wit h
Go ve rnm e nt of Ja pa n
Indian rupees 20.9 trillion ($418 billion). Despite the increased financing to these businesses, formal
sources are able to channel only Indian rupees seven trillion (nearly $200 billion). The study estimates
that banks can easily address the sector’s debt and equity financing requirement of Indian rupees
3.57 trillion (nearly $105 billion). It recommends a mix of well-rounded fiscal support, strong policy
framework, and incentives promoting innovation to expand formal financing to these enterprises.
Small and Medium Enterprise Gender Baseline Estimation for IFC’s Financial Market Portfolio in
SouthAsia Enterprise Development Facility
Managed by IFC, in partnership with the UK Government and Norad
Nepal (November 2012)
In Nepal, women own about 14,300 small and medium enterprises, accounting for two percent of
the country’s GDP and employing over 200,000 workers. IFC has released a study that finds women
entrepreneurs could play a more significant role in Nepal’s economic growth if financial institutions
SME Gender Baseline Estimation for IFC’s address their financing needs with suitable offerings. The study pegs their current credit requirement at
Financial Markets Portfolio
$106 million. The South Asia Enterprise Development Facility, managed by IFC, in partnership with UK
Government and the Norwegian Agency for Development Cooperation, conducted the study.
November, 2012 The report suggests that women are more entrepreneurial than men, generating six percent higher profits
on annual sales even though they operate smaller businesses. Access to financing remains their biggest
hindrance because banks prefer fixed assets as collateral, which few women entrepreneurs possess.
IFC Advisory Services in South Asia Other operational needs include improved access to markets and training for skill development. The study
suggests credit rating and collateral registry should guide financial institutions, helping them tap into the
$2.5 billion lending opportunity for small businesses.
34
CREDITS
Photography
Sailendra Kharel (front cover)
Manas Ranjan Ojha
Dilip Banerjee
Kesara Ratnavibhushana
Antonio Rodrigo
A. Jacobson
Sarah Karim
Kushang Singh
Bijay Gajmer
Loty Salazar
S. Jain
Sailendra Kharel
John Isaac
This publication may contain advice, opinions, and statements of various information providers
and content providers. IFC does not represent or endorse the accuracy or reliability of any advice,
opinion, statement or other information provided by any information provider or content provider,
or any user of this publication or other person or entity.
IFC South Asia, 2014
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively
on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a
group that collectively determines our policies. Working with private enterprises in more than 100 countries,
we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity.
IFC leverages the power of the private sector to create jobs and tackle the world’s most pressing development
challenges. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives.
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