WASHINGTON, Feb. 9, 2021—IFC, a member of the World Bank Group, today launched an initiative to help financial services providers deliver funding to small businesses, informal enterprises, and low-income households that have been hit the hardest by the lockdowns and economic slowdown caused by the COVID-19 pandemic.
The new Base of the Pyramid Program will provide up to $400 million to microfinance institutions, non-bank financial institutions, and banks that are focused on micro, small, and medium enterprises (MSMEs). The program will be available to new and existing IFC clients.
The new initiative is an expansion of the $8 billion Fast-Track COVID Facility that IFC launched in 2020 as part of the World Bank Group's response to COVID-19.
"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," said Stephanie von Friedeburg, Interim Managing Director and Executive Vice President, and Chief Operating Officer of IFC. "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."
In developing countries, there is currently a $5.2 trillion financing gap for MSMEs. The gap eclipses $8 trillion when informal enterprises are included.
The program will be supported by the International Development Association's Private Sector Window (IDA PSW) to help de-risk the credit and foreign currency exposures in projects in low-income countries. Up to $80 million will be made available through a pooled first-loss guarantee from the IDA-PSW Blended Finance Facility to support senior loans. In addition, resources from the IDA-PSW Local Currency Facility may be allocated to support local currency lending to IFC clients included in the Base of the Pyramid Program.
MSMEs and the informal sector are essential to economic growth, job creation, and poverty alleviation in emerging markets. Many small businesses were already credit constrained before the pandemic arrived, and now face increased risks and uncertainty. For the financial institutions that serve these enterprises, the crisis has triggered new liquidity pressures, particularly for non-deposit taking institutions. As the largest private sector focused international funder in the financial inclusion space, IFC is well positioned to help financial service providers sustain their operations through the crisis and continue to support their MSME clients.About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
About the IDA Private Sector WindowStay Connected
As part of the 19th replenishment of the International Development Association (IDA), the World Bank Group is continuing the IDA Private Sector Window (PSW) created under IDA18 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA's objectives and the World Bank Group's twin goals, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by IFC and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution and the World Bank Group's other tools and approaches are insufficient. For more information, visit: http://ida.worldbank.org/psw