Constraints remain despite efforts by International Financial Institutions (IFIs)
The Global Competitiveness Report 2012-2013 by the World Economic Forum lists access to finance as the second or the third top constraint to SME growth in almost all developing countries.
Tremendous work has been done by our development partners (IFC, EBRD, AfDB and ADB) in providing enhanced liquidity to enable businesses to gain access to financing. But the challenge remains that all these provisions still do not reach SMEs as they cannot meet the bank underwriting conditions to access finance. In other words, in many cases banks have the possibility to lend, but they can’t find qualified borrowers.
A recent International Finance Corporation (IFC) study places SMEs’ financing gap in developing countries at $2 trillion. The report called “Closing the Credit Gap for Formal, Informal, Micro, Small and Medium Enterprises, ” shows over 200 million formal and informal SMEs in developing countries do not have a loan or overdraft, or have a loan or overdraft but still find access to finance a constraint. A sizeable number of exporters or potential exporters fall into this category. On the other hand, on average, about two-thirds of full time jobs in developing economies are provided by small firms, therefore urgent action is essential in meeting their financial needs, supporting their growth.
ITC Activities in Access to Finance for SMEs
For the International Trade Centre (ITC), the support of job-creating SMEs, their growth and their entry in the multi-lateral trading system is paramount. Today, thanks to the progress in Information Communication Technology, trading across borders is only a matter of will for qualified SMEs. Through the Internet, an African SME can contact a client in northern Europe using the same steps as it does to contact a client next door in Africa itself.
Distances have shrunk and the opportunity of trading internationally needs to be made available to all SMEs which produce quality products. However, much capacity building is needed on how to conduct an international transaction and how to protect both transacting sides’ commercial interests, utilizing trade finance and trade facilitation tools.
More good global economy news
Canada scrapping tariffs, opening more free trade.
TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said on Sunday the government would eliminate tariffs on dozens more products used by Canadian manufacturers, aiming to lower their costs and encourage more hiring.
The initiative would scrap custom duties on 70 items used by businesses in sectors such as food processing, furniture and transportation equipment.
Flaherty, who estimated the tariff cuts would save Canadian businesses C$32 million ($30.5 million) a year, said the cuts were part of the Conservative government's overall free trade policy
Hillary Offers a Comprehensive Energy Plan
Hillary's plan promotes energy independence, addresses global warming, and transforms our economy:
* A new cap-and-trade program that auctions 100 percent of permits alongside investments to move us on the path towards energy independence;
* An aggressive comprehensive energy efficiency agenda to reduce electricity consumption 20 percent from projected levels by 2020 by changing the way utilities do business, catalyzing a green building industry, enacting strict appliance efficiency standards, and phasing out incandescent light bulbs;
* A $50 billion Strategic Energy Fund, paid for in part by oil companies, to fund investments in alternative energy