The MENA region suffers from one of the world’s highest unemployment rates among youth and the lowest participation of women in the labor force. At the same time, MSMEs account for a high share of private sector employment in the region and play an important role in terms of job creation. However, one of their greatest challenges to grow is their limited access to credit. In order to close the large financing gap for MSMEs, improved framework conditions are necessary. Moreover, financial institutions need to better target MSMEs through tailored banking products and services.

The overall objective of the Facility is to improve access to finance for MSMEs with a focus on particularly underserved groups, including women. This will contribute to better financial inclusion and a stronger private sector which will ultimately create jobs and decrease income inequality. In order to increase access to financial services for MSMEs the Facility will promote reforms of the legal and regulatory framework to improve the enabling environment for MSME finance and enable the modernization of financial market infrastructure (credit bureaus, movable collateral registries, etc.). It will also advise financial institutions such as banks or microfinance institutions to improve their systems, products and capacities to serve MSMEs, and support the regional knowledge exchange on best practices.

Increased access to financial services for MSMEs through:

strengthened legal and regulatory environment

strengthened financial market infrastructure

improved capacity of financial institutions to serve MSMEs

Expected results:  

Advisory services provided to governments and regulating bodies for an improved regulatory and legal framework

Advisory services provided to financial sector authorities for setting up and operating financial market infrastructure

Advisory services provided to financial institutions on sustainable banking services for MSMEs

Results from previous phases:  

In its first phase from 2012-2018 the Facility delivered technical assistance projects that strengthened the provision of finance to MSMEs in the MENA region, including Tunisia, Egypt and Morocco:

- The Facility helped to expand financial institutions’ services to MSMEs: over 5.5 million loans, valued at USD 4.2 billion, were disbursed to microfinance clients (59% to women), and an additional USD 4.2 billion in loans were disbursed to SMEs-

- The risk management frameworks of financial institutions were strengthened and thus their portfolio-at-risk declined-

- 20 key laws/regulations related to MSME finance were enacted, for example Egypt’s new microfinance law created strong foundations for the microfinance market-

- US$2.6 billion of WBG loans and equity in MSME-supporting activities were leveraged which supported over 300'000 jobs.