Kathmandu, 11 August: Small businesses and people in Nepal will have better access to financing, with International Finance Corporation (IFC)’s broader strategy for small and medium enterprises (SMEs) aiming to reach over 30,000 SMEs by 2023 while helping to improve inclusiveness, competitiveness, and sustainability of the financial sector in the country.

IFC is investing $45 million in the nation’s recovering financial sector as part of a wider SME strategy, which aims to help spur a greater range of financial products and services such as psychometric scoring solutions and payment systems reforms. At the same time, IFC is also extending a trade finance facility as part of Global Trade Finance Program (GTFP), which includes a special provision for green trade financing. This is the first Green GTFP for IFC globally.

“The COVID-19 pandemic has had a massive impact on Nepal’s small and medium sized enterprises, a key pillar of the country’s economy. As these businesses need urgent attention, IFC’s investments will help show that SME lending is both viable and sustainable. We are optimistic it will lead to an increase in overall banking credit for these businesses, allowing SMEs to grow and accelerate recovery in Nepal,” said Allen Forlemu, IFC's Regional Industry Director for Financial Institutions Group.

SMEs are the growth engine of Nepal’s economy, employing 1.8 million people and contributing around 22 percent of the gross domestic product (GDP). Yet, access to finance is a major constraint for 44 percent of SMEs, especially small and women-owned firms in remote areas, with the finance gap estimated to be at $2.9 billion. With limited financing facilities, small business owners in Nepal are forced to operate on a cash basis. As a result, they struggle to grow given the massive gap between the financing they need and the funds they can currently access.

People's News Monitoring Service