OUR TASK

A multilateral institution engaged Finance For Impact to conduct a market assessment and devise a foreign assistance policy that would facilitate access to finance for SMEs. Our work is set to guide up to USD300 million in financial assistance over a three-year period.

OUR APPROACH

At the outset, we proposed a well-defined analytical framework to our client, including a range of information sources and methods of analysis as outlined below:

Preliminary Desk Review. We undertook extensive quantitative and qualitative research to understand the unique finance capabilities and constraints existing in the country. We collaborated closely with government stakeholders, including various ministers and policymakers, to collect the key information and data. Based on our research and understanding of the challenges facing the country, we developed a detailed methodology to conduct our study.

Targeted Interviews. The team consulted widely with government ministries, financial institutions, NGOs and business associations, executives from large and small enterprises to assess market needs, opportunities and constraints. About 80 persons were interviewed in the course of two missions in the country. Discussions served as a source of opinions, insights, and hypotheses on the constraints existing in the local financial market. For conducting interviews, various sets of guiding questions were prepared.

Data Collected. The assumptions underlying the analysis were always quantified. Key macro-economic and financial indicators provided background information. Additional data were collected and analyzed to determine the impacts of access to finance barriers, quantify the finance gap, and precisely assess the demand and supply for SME finance.

Survey. To complement the information collected during interviews, a survey of the major commercial banks was conducted to assess the availability and affordability of finance in the country.

SME Panels. Different panels were organized in order to identify the key constraints impacting market participants.

Validation Workshop. A stakeholder workshop was organized in the country with all stakeholders participating in the assignment. The Finance for Impact team generated more than 20 distinctive recommendations that would potentially facilitate access to finance. The most promising of these were thoroughly discussed during the workshop to reach a consensus on the specific actions to prioritize.

Final deliverable. The team developed a final report including practical recommendations and a roadmap to allow for the financial assistance to be implemented within a given timeframe. The final deliverable proposed a clear framework for disbursement of the loan in tranches over the three-year period, where disbursements were linked to the achievement of specific outputs. In line with our commitment to seeing strategy through to action, we also trained ministry and donor staff on their role in the implementation process and the achievement of results.

RESULTS

Our study guided a path toward the award of a loan to help the Government provide better access to finance for exporter SMEs, with a clear mechanism to allocate funding through the financial sector.

Clear priorities and expected results were agreed over the next three years.

The strategy led to the strengthening of a public bank, which provided working capital solutions to the private sector for cross-border trade purposes.

Our report also set an ambitious agenda for the country to create a legal framework that would facilitate cross-border factoring and the access to supply chain financing for SMEs.

This assignment enabled the client to sustain its position as one of the key donors in the finance sector, while improving the effectiveness of its aid.