MICROCAPITAL BRIEF: Ministry of Foreign Affairs of the Netherlands Pledges $27m in Loans, Financial Advisory Services to Small, Medium-sized Enterprises via International Finance Corporation’s (IFC’s) Global SME Finance Facility

The International Finance Corporation (IFC), a member of the US-based World Bank Group that aims to increase economic growth in developing countries, and the Ministry of Foreign Affairs of the Netherlands recently announced that the Dutch government has pledged USD 27 million to IFC’s “Global SME Finance Facility,”[1] a credit line that provides funding to small and medium-sized enterprises (SMEs). The contribution of the Dutch government is intended to support two types of projects: USD 16 million will be dedicated to risk sharing facilities and USD 11 million will be spent on advisory projects. The Global SME Finance Facility aims to serve SMEs that are women-owned, located in fragile countries, engaged in climate-related projects or related to agriculture. The funding will be made available via on-lending by financial institutions that operate in “emerging markets”[1].

Dimitris Tsitsiragos, IFC’s vice president for global client services, said that “SMEs account for over two-thirds of employment in developing countries, yet they face difficulties in accessing finance to grow and create jobs. Our partnership with the Netherlands and other like-minded partners will help support SMEs and demonstrate the viability of SME financing”[1]. Jeroen Roodenburg, the director for sustainable economic development and ambassador for private sector & development cooperation at the Ministry of Foreign Affairs of the Netherlands, added that “with our contribution, the Global SME Finance Facility will focus on women entrepreneurs in low-income countries”[1].

As of 2014, the Ministry of Foreign Affairs of the Netherlands reported a provisional budget for foreign affairs of EUR 9.1 billion (USD 10 billion) and a provisional budget for foreign trade and development of EUR 5 billion (USD 5.5 billion), out of which EUR 3 billion (USD 3.3 billion) was designated for development cooperation. As of 2014, IFC reported total assets of USD 84.1 billion, net income of USD 1.48 billion and return on assets of 1.8 percent. The Global SME Finance Facility was established in 2012 with USD 500 million in commitments mobilized by IFC from international development agencies and private sector organizations. As of 2015, it has 75 active projects in approximately 25 countries.

By Alíz Crowley, Research Associate

About the International Finance Corporation (IFC)

The International Finance Corporation (IFC), a US-based member of the World Bank Group, offers loans, equity investments, advisory and risk mitigation services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2014, IFC has 184 member countries that drive its policies and approve disbursements. As of that same year, IFC reported total assets of USD 84.1 billion, net income of USD 1.48 billion and return on assets of 1.8 percent.

About the Ministry of Foreign Affairs of the Netherlands

The Ministry of Foreign Affairs of the Netherlands is a government body based in the Hague that is responsible for carrying out Dutch foreign policy. It focuses on “international stability and security, energy and raw material security, the international legal order (including human rights) and the commercial and economic interests of the Netherlands and Dutch businesses.” As of 2014, the ministry reported a provisional budget for foreign affairs of EUR 9.1 billion (USD 10 billion) and a provisional budget for foreign trade and development of EUR 5 billion (USD 5.5 billion), out of which EUR 3 billion (USD 3.3 billion) was designated for development cooperation.

Sources and Additional Resources

[1] International Finance Corporation, News and Events, IFC, Netherlands Boost Support to Emerging Market SMEs

[2] Ministry of Foreign Affairs of the Netherlands, Ministry of Foreign Affairs faces far-reaching budget cuts

MicroCapital Universe Profile: Ministry of Foreign Affairs of the Netherlands

MicroCapital Universe Profile: International Finance Corporation (IFC)

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