MICROCAPITAL BRIEF: Asian Development Bank (ADB) Adding $100m to Supply Chain Finance Program, Increasing Guarantees to Banks Lending to SMEs in Asia-Pacific via Alternative Scoring Methodologies

The Philippines-based Asian Development Bank (ADB) recently elected to add USD 100 million to the Supply Chain Finance Program (SCFP), a risk-sharing mechanism it launched in 2012. SCFP boosts lending to small and medium-sized enterprises (SMEs) in the Asia-Pacific region by providing partial guarantees to banks using alternative methods to evaluate SMEs’ creditworthiness. ADB describes the strategy as follows: “Rather than focusing on balance sheets and collateral, which tend to be weak at SMEs, supply chain finance focuses on the history of performance, longevity, and nature of relationships within a supply chain.”

Since its inception, SCFP has partnered with international banks on 550 transactions valued at USD 500 million. The plan for the new funding includes reaching “more challenging markets,” “working with local banks and increasing the use of technology.”

Established in 1966, ADB has 67 country members, of which 48 are in the Asia-Pacific region. Its mission is to support environmentally sustainable growth and regional integration through loans, technical assistance, grants, equity investments and guarantees. During 2016, ADB invested USD 17.5 billion in projects with total budgets of USD 31.7 billion.

Sources and Additional Resources

ADB press release
https://www.adb.org/news/adb-ramps-support-smes-additional-supply-chain-financing

ADB annual report, 2016
https://www.adb.org/documents/adb-annual-report-2016

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