ADB partners with the Mastercard Impact Fund to support MSMEs

The partnership will use a USD 5 million grant from the Mastercard Impact Fund to facilitate up to USD 1 billion in ADB financing for financial institutions, aimed at providing loans to micro, small, and medium-sized enterprises (MSMEs).

According to officials from  ADB,  MSMEs are vital to the economies of Asia and the Pacific. However, many of these businesses struggle to secure adequate financing. By combining the resources and expertise of ADB and Mastercard, this initiative aims to unlock the potential of MSMEs, particularly those led by women or focused on climate finance. This collaboration will empower businesses and promote inclusive and sustainable economic growth in the region.

70% of women-owned MSMEs encounter financial challenges

The Asia-Pacific region represents 52% of the total financing gap for emerging market MSMEs, which is estimated to be nearly USD 2.5 trillion. Within this region, 43% of formal SMEs remain either unserved or underserved by financial institutions. Furthermore, 70% of women-owned MSMEs encounter significant hurdles in obtaining financial assistance. According to Harvard Business Review, in 2018, only 4% of total investment funds were allocated to all-women businesses, dropping to 2% by 2021. The transaction volume for all-female businesses has also remained unchanged at just 6%. To address these challenges, the Mastercard Impact Fund aims to upgrade ADB's initiatives to provide financing to MSMEs throughout Asia-Pacific by offering risk-reducing capital, incentives, and capacity-building support to financial institutions.

At least 50% of ADB’s total financing will be allocated to women-led or owned  MSMEs and climate finance for small businesses over the next four years. The initial target markets for this initiative include India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Georgia.

This collaboration between the Mastercard Impact Fund and ADB represents an important advancement in tackling significant financing gaps for MSMEs in the region. By harnessing their shared expertise and resources, both organisations are dedicated to promoting sustainable growth and inclusive prosperity for MSMEs across Asia and the Pacific.