Financial Inclusion of Small and Medium-Sized Enterprises in the Middle East and Central Asia

Abstract

; Armand Fouejieu (EUR); and Mishel Ghassibe and Samir Elsadek (summer interns). It incorporates input from staff in other IMF departments, as well as experts from the World Bank, International Finance Corporation, Asian Development Bank, and International Organization of Securities Commissions, including via an iLab brainstorming session. 1 The Middle East and Central Asia region refers to 31 countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) and in the Caucasus and Central Asia (CCA). Financial inclusion is defined as the access to, and use of, formal financial services.

Financial Constraints and Small and Medium Enterprises: A Review*

“…Blancher et al (2019) identify several areas where policy could improve the financial inclusion of SMEs: expanding the financial technology (FinTech) sector to reduce reliance on banks; credit information sharing; and modernising insolvency regulations and the legal system to support SMEs.…”

Financial Management Practices and Growth of Small and Medium-Scale Enterprises: The case of Kassena-Nankana West District

“…The importance of financial inclusion is increasingly recognized by policymakers around the world (Blancher, 2019;World Bank Group, 2018). According Blancher (2019), financial inclusion refers to making financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net-worth or company size; and that it strives to remove the barriers that exclude people from participating in the financial sector.…”

“…According Blancher (2019), financial inclusion refers to making financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net-worth or company size; and that it strives to remove the barriers that exclude people from participating in the financial sector. Improving SME financial inclusion can help increase economic growth, job creation, and the effectiveness of fiscal, monetary policy and financial stability (Blancher, 2019).…”

“…This is detrimental to private sector borrowers including SMEs (OECD, 2018). A way to reduce financing obstacles for SMEs is to strengthen the infrastructure that supports financial transactions, not forgetting the laws, regulations and institutions to create, register and enforce collateral, insolvency regimes and credit reporting tools (Blancher, 2019). A good business environment enables entrepreneurs provide the incentives for enterprises to thrive (International Labour Organization, 2007).…”

Access to finance among small and medium-sized enterprises and job creation in Africa

“…Recent analysis suggests that the poverty rate in African countries is expected to decline only to about 25% by 2030 while in the other regions of the world it will drop to less than 3% (Bicaba et al, 2017;Beegle and Christiansen, 2019). Among the factors holding back poverty reduction is the lack of access to finance for small and medium-sized enterprises (SMEs), which are among the largest contributors to job creation in developing countries (Blancher, 2019;Ghassibe et al, 2019). A report from the International Financial Corporation (2017) estimated that in developing countries, more than 40% of SMEs have at least partially constrained access to external finance, while about 20% face heavy constraints.…”