A new report examining the capital needs of small business in developing countries highlights that international finance institutions, such as the European Investment Bank (EIB), stimulates small business lending by effective and cost-efficient cooperation with local partner banks, applying strict lending standards and using expertise from similar situations in other markets.

Six leading development finance experts backed a study which underlines the continued challenge of filling the funding gap facing small business in many developing countries and the benefit of targeted support by international finance institutions. According to the report, international finance institutions, such as the European Investment Bank, can make a significant contribution to improving access to finance by providing capital and technical assistance to local intermediary banks. In a workshop recently celebrated, the European Investment Bank (EIB) stressed the importance to ensure effective support for SMEs.

In particular, over the last five years the European Investment Bank (EIB), has provided €1 billion for small business funding in Africa, the Caribbean and Pacific regions, and South Africa. Moreover, recent lending programmes in Uganda and Kenya to provide long-term funding in Euro and US dollars, as well as local currency, to selected intermediary banks in Uganda and Kenya under the Private Enterprise Finance Facility, shows its experience of working closely with local banks to improve small business.

The Dalberg report was presented by the Aspen Network of Development Entrepreneurs. This report also calls for efforts to increase the numbers of small and medium sized enterprises to act as stimulus for economic growth.