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.”
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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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