IFC MSME-facility 2.0 2019-2025
Contribution ID : SE-0-SE-6-13591This website displays open data about Swedish aid, which shows when, to whom and for what purpose Swedish aid is paid out, as well as what results it has produced. This page contains information about one of the contributions financed with Swedish aid.
Summary in English: The International Finance Corporation has requested funding from Sweden for the implementation of the regional program "Financial Inclusion and Jobs for Middle East and North Africa (MENA MSME 2.0)". The total budget for the program is just over 48 million USD, and IFC has requested 192 million SEK from Sweden for the period 2019-2023. The...
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Summary in English: The International Finance Corporation has requested funding from Sweden for the implementation of the regional program "Financial Inclusion and Jobs for Middle East and North Africa (MENA MSME 2.0)". The total budget for the program is just over 48 million USD, and IFC has requested 192 million SEK from Sweden for the period 2019-2023. The program will be implemented in Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Palestine and Iraq. The program is a multi-donor regional fund to support micro-small and medium sized companies (MSMEs) in getting improved access to finance and financial services, promote sustainable job creation, and encourage private sector growth in the region. This is the second phase of the facility and the program's proposed duration is 2019-2023. The intervention is within the framework of the economic sector of the Swedish MENA strategy, "improved opportunities for regional economic development as a prerequisite for poor people to be able to improve their living conditions". The program is implemented by two of the World Bank Groups organization, namely the IFC and the World Bank, where IFC will have the main responsibility. Creating decent jobs is one of the most critical challenges in a MENA (Middle East-North Africa) region that has undergone a mix of positive and negative democratic transition, economic stagnation, political turmoil and conflicts for almost a decade since the start of the Arab Spring 2011. These factors combined with high population growth have meant that the IFC estimates that the greater Arabregion needs up to 300 million new jobs by 2050. The program's intervention logic is based on the results of the first phase and dialogue with a large number of stakeholders. MSMEs are central to all MENA economies and account for approximately 85-95% of all formal private sector employees in the region. In order to improve the economies and create jobs, a favorable business climate is needed where the companies have access to finance and financial services, which is today largely lacking. The challenges include poor regulations, poor capacity and limited understanding of the issues among MSMEs. The second phase of the MSME facility will address various barriers to financial inclusion and access to funding identified in Phase One. The program has a well-developed theory of change with a linked results framework. The impact goals are inclusive growth, job creation and reduced inequality. Activities to achieve these goals will be carried out within three thematic areas and one cross-sector area. 1. Strengthen the regulatory framework and capacity of legislative and implementing public actors 2. Develop and strengthen the financial infrastructure, including technical solutions 3. Support to financial institutions, with a focus on women 4. Regional coordination, knowledge sharing and method development The total budget for the program is just over $ 48 million and the program will be implemented in Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Palestine and Iraq. The activities will primarily be through advisory activities from the IFC and the World Bank. No direct transfer of funds to third-party stakeholders is envisaged. In addition to Sweden's support of SEK 192 million, the program is funded by the UK and Switzerland. A current limited deficit of 3 million USD is expected to be covered by other donors in the near future.
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Result
The activities financed by the Trust Fund are 1. improving the legal and regulatory framework for the financial sector (Pillar I) which includes (i) technical assistance to client countries on best practices on legal and regulatory reforms to improve the MSME business environment, (ii) build capacity of key financial sector institutions and supervisory bodies to implement new laws and regulations and (iii) improve effectiveness and efficiency of public MSME finance institutions by putting in place suitable products and models. These activities are bank-executive (World Bank). IFC-executive activities are 2. improving the financial sector infrastructure (Pillar II) through digital finance with focus on the enabling environment and coordination mechanisms, expansion of access networks and digitalisation of payments. Also working on fintechs access to finance for MSMEs through policy support, pilot relevant fintech models and knowledge sharing. IFC also work to support the development of conducive financial infrastructure for banks and non-bank financial institutions such as credit bureaus, credit registries etc. provide advisory services and capacity building to facilitate greater access to finance for MSMEs by strengthening institutional framework for secured transactions. Advisory services to financial and support institutions (Pillar III) to design and implement innovative products and services. IFC provides technical assistance to banks and MFIs on MSME banking with emphasis on MSMEs and women-led enterprises, young entrepreneurs. Micro Finance Institutions (MFIs) operations in terms of strategy, products, risk and credit management, customer service. Pillar I had a slow start at the outset of the program, due to delays in government approvals. The work is under Pillar I is implemented by the World Bank. To provide some examples in Algeria World Bank worked on a report on development of SME-financing and a report to support the microfinance sector. In Morocco World Bank completed a market study on agri-finance and is currently working with the Central Bank on consumer protection framework and regulations around crypto-assets. In Egypt, the work continued with the Central Bank on a national financial education strategy and to strengthen consumer protection and banking sector competition. In Jordan and Iraq, work is ongoing to develop a national financial inclusion strategy. In Lebanon, the work is progressing slowly with a political economy analysis of the financial crisis (liked to read), and analysis of the current regulatory frameworks in Lebanon´s insurance sector. In Palestine, work is ongoing to provide technical assistance on microfinance and digital payments. Pillar II in Algeria IFC is working with central bank on credit registries. In Morocco, the team is very active working on credit reporting and credit scoring and the Central Bank´s public credit registry (PCR) and credit scoring. Supply chain strategy for Morocco is supported by IFC to the central bank and private and public stakeholders, also work is ongoing on digitization of the insurance market. In Tunisia, work is ongoing on credit reporting and agri-insurance. In Egypt, supply chain finance project has signed agreement to initiate implementation of planned activities. In Jordan initiated work on insolvency framework. Lebanon the supply chain finance project came to an end and inclusive insurance project is ongoing. Pillar III in Algeria discussing with Arab Leasing Corporation on digital diagnostics and strategy. Morocco multiple projects are active such as update of business pan and financial projections for Fondation Banque Populaire to develop non-financial services and with banks to improve business plans etc. New project started with Morocco´s leading MFI on its digital transformation. In Tunisia working with Enda Tamweel MFI on strategy and risk management and with Enda chash, there new payment company. Focus on digital payment strategy with the Central Bank. In Egypt, work on product development with the leading MFI Tanmeyah and Al Tadamun. Also, training on digital growth for women entrepreneurs was held. In Jordan IFC is supporting development of digital lending product and with Capital Bank to enhance risk management. In Palestine IFC also worked on digital financial services study and in Iraq on SME banking study.
The IFC MSME-facility 2.0 has a theory of change that is based on the results and experiences of the first phase as well as extensive consultations with a wide range of stakeholders. The overall impact goals in the results chain are job creation, GDP growth and decreased income inequality. The specific underlying MSME-facility impact goals include increased expansion and investments for MSME:s, increased profitability and productivity, MSME:s that are creating cascading effects for other enterprises in the same value chain. Under this impact objectives there is an outcome objective financial inclusion that include: - reduction of cost for MSME finance - ability to use movable collateral to obtain loans - increased access to financial services for MSMEs - increased access to financial services for women and youth These outcome objectives will be achieved by a number of activities within various priority areas (in the programme documents referred to as "Pillars". These pillars relationship and relevance for the intended impact on access to finance for MSMEs has also been assessed through evidence mappings conducted by the WBG MoE team. These pillars are: Regulatory Framework: - improvements in ease of doing business - MSME finance support regulations operationalized and in place Financial Infrastructure: - financial institutions consulting credit bureaus for credit worthiness - movable assets used as lending collateral - mediation procedures routinely used Financial Institutions: - increase in lending to MSMEs - increase offer of financial products to women, youth, MSMEs - increase lending to women-owned MSMEs - increased access to digital financing solutions
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