The International Finance Corporation has initiated $400m to aid financial services providers deliver funding to small businesses, informal enterprises, and low-income households adversely affected by the COVID-19 pandemic.
The corporation disclosed this in a statement on Tuesday.
It said, “The new Base of the Pyramid Program will provide up to $400m to microfinance institutions, non-bank financial institutions, and banks that are focused on micro, small, and medium enterprises. The program will be available to new and existing IFC clients.”
It explained that the initiative was an expansion of the $8bn Fast-Track COVID Facility that it launched in 2020 as part of the World Bank’s response to COVID-19.
Commenting, IFC’s Interim Managing Director and Executive Vice President, Stephanie Friedeburg, said, “For so many micro and small businesses, quick access to relief funds during the pandemic is not just a matter of support— it is a matter of survival. This is exactly what this program aims to tackle, offering these businesses a chance to weather the storm and emerge stronger and more resilient, particularly in some of the poorest and most fragile countries.”
The statement noted a $5.2tn financing gap for MSMEs in developing countries, which cast a shadow on $8tn when informal enterprises are included.
“Up to $130m will be made available, including a pooled first-loss guarantee of up to $80m from the IDA-PSW Blended Finance Facility to support senior loans, and up to $50m from the IDA-PSW Local Currency Facility to support local currency lending.”
Many small businesses were already credit-constrained before the pandemic arrived and now face increased risks and uncertainty.
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