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G20 Summit promotes innovative finance models for SMEs

(Xinhua)
Updated: 2010-11-12 15:55
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SEOUL -- The G20 Seoul Summit and Ashoka, a working community of social entrepreneurs, on Friday introduced 14 innovative finance models dedicated to unleashing the potential of small and medium-sized enterprises (SMEs) in emerging markets.

The impact of the finance models covers a wide range of strategies including training, risk management, visibility and access to new markets, said Ashoka Vice President Bill Carter during the summit.

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He said 80 percent of SMEs in low income economies are caught in a finance trap and their needs to grow exceed the capability of most micro finance institutions.

"At the same time, these SMEs are not yet significant enough to access major financing from commercial banks," he said.

Carter said the G20, through the Rockefeller foundation, asked Ashoka to seek solutions to this challenge by using their open- source and transparent online platform.

The 14 winning finance models were selected through independent judges from over 300 candidates in more than 30 countries in the world.

"There are many insights and useful examples in the work of these 14 winners. Their solutions are on track to direct billions and billions of dollars to small enterprises in low income economies around the world," said Carter.

They offer new ways of linking enterprises to prospective investors, changing the rules to simplify and standardize loans, and new ways to evaluate the ongoing ability of the enterprise to service a loan, he said.

The SME sector is vital to the world economy and the role of SME businesses is increasingly viewed as that of a powerhouse of employment, innovation and entrepreneurial spirit, as well as a large source of investment, particularly in emerging markets, according to a discussion report on "nurturing SME sector" for the G20 Business Summit.

The G20 summit was launched two years ago in the wake of the financial crisis with an aim to save the world from falling into a prolonged recession and preventing a recurrence of worldwide downturns in the future.