Improving SME Access to Trade Credit and Financing in MENA
Small and medium enterprises (SMEs) in Middle East and North Africa (MENA), especially female entrepreneurs, face steep challenges in accessing finance and credit. This situation is now even more dire with the Covid-19 crisis. SMEs finance their ac...
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| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/446661606972783139/Improving-SME-Access-to-Trade-Credit-and-Financing-in-MENA http://hdl.handle.net/10986/34898 |
| Summary: | Small and medium enterprises (SMEs) in
Middle East and North Africa (MENA), especially female
entrepreneurs, face steep challenges in accessing finance
and credit. This situation is now even more dire with the
Covid-19 crisis. SMEs finance their activities in three main
ways: (i) shareholder funds from family, business partners,
and investors (ii) payment facilities from suppliers and
pre-payments from clients, known as inter-firm trade credit
(in short “trade credit”), and (iii) credit facilities from
banks and other financial institutions, of which a large
chunk is for working capital. All these sources of funds are
required for SMEs to conduct their activities in a
financially sustainable manner. The focus of this quick note
is on the latter aspects: SME access to inter-firm trade
credit and bank facilities to finance trade. These have
major implications for financial inclusion, private sector
development, value chains, and ultimately, on employment and
growth. IFC is already very active in this segment, notably
in poorer and fragile countries with the support of the IDA
Private Sector Window, but more can be done by the World
Bank. The financing of trade and value chains also needs to
be much better understood by policymakers in our MENA client countries. |
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