Meeting Small Firms' Trade Finance Needs: Lending Institutions in Asia and the Pacific Are Exploring How to Meet Small Exporters' Financing Needs in a New Initiative Spanning 27 Countries

Article excerpt

Small businesses are the backbone for sustainable growth and jobs in developing countries. Access to credit for business start-up and development, however, remains difficult for most. Banks and other financial service providers, used to dealing with larger firms, rarely have the knowledge to assess the potential and evaluate risk areas of small companies.

ITC, together with the Association of Development Finance Institutions of Malaysia (ADFIM) and the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), which represent 56 organizations from 27 countries, launched an Asia-Pacific Small and Medium Enterprises Finance Initiative to improve small firms' access to trade finance in the region.

Lenders: build expertise in SME needs

The three agencies launched the initiative during the International Chief Executive Officer Forum of Development Financing Institutions (CEO Forum) held in Kuala Lumpur in September 2005. Preparatory discussions for the conference had revealed the lack of specialized institutions for small and medium-sized enterprises (SMEs). Opening the Forum, Malaysia's Finance Minister II also announced the restructuring of the country's banking sector and the creation of an "SME Bank", the first of its kind in Malaysia.

The initiative consists of. …