MANILA, Philippines, November 28, 2024 – The Asian Development Bank (ADB) and the Mastercard Impact Fund have announced a groundbreaking collaboration to enhance financial access for micro, small, and medium enterprises (MSMEs) in the Asia-Pacific region. The partnership aims to deploy a $5 million grant from the Mastercard Impact Fund, administered by the Mastercard Center for Inclusive Growth, to unlock up to $1 billion in financing for financial institutions to support MSMEs.
This initiative prioritises women-led enterprises and climate finance, targeting key underserved sectors in the region.
The Asia-Pacific region faces a significant MSME financing shortfall, estimated at $2.5 trillion. Around 43% of formal small and medium enterprises (SMEs) in emerging markets remain underserved or entirely unserved by financial institutions, with women-owned businesses disproportionately affected. Studies indicate that 70% of women-led MSMEs in the region struggle to secure financial support.
ADB’s Vice-President for Market Solutions, Bhargav Dasgupta, underscored the importance of the partnership, “MSMEs are the backbone of economies across Asia and the Pacific, yet many struggle to obtain adequate finance. By combining the resources and expertise of ADB and Mastercard, this initiative will unlock the potential of MSMEs, particularly those run by women or supporting climate finance. It will empower businesses and foster inclusive and sustainable economic growth across the region.”The Mastercard Impact Fund’s grant will reduce credit risks for financial institutions and provide incentives, along with technical assistance, to encourage lending to unserved or underserved MSMEs.
Jon Huntsman, Vice Chairman of Mastercard and Board Director of the Mastercard Impact Fund, remarked, “This partnership deepens the work we’re doing in the Asia-Pacific region to support entrepreneurs and small businesses. By bolstering resilience to climate and economic shocks, we are putting more people, communities, and entrepreneurs on the path to financial inclusion and prosperity.”
Mastercard’s Asia-Pacific President, Ari Sarker, added, “Despite their critical role in economies, MSMEs continue to face challenges in accessing credit – a fundamental resource for growth. For economic growth to be truly inclusive, closing the MSME funding gap must be a priority for both public and private sectors. This partnership is a meaningful step in that direction.”
The initiative, which will focus on countries such as India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Georgia, will direct at least 50% of financing towards women-led businesses and climate-related projects over the next four years.
By uniting their resources and expertise, ADB and Mastercard aim to bridge critical financing gaps and drive sustainable, inclusive growth for MSMEs across the Asia-Pacific region.