Access to Finance for SMEs: Challenge and Chance for Policymakers
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Capacity Building in Trade Institutions of Central Asian Countries Istanbul, 3rd - 5th February 2015. Overview of typical models of finance including microfinance for SMEs in emerging countries.
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Access to Finance for SMEs: Challenge and Chance for Policymakers
- 1. Capacity Building in Trade Institutions of Central Asian Countries Istanbul, 3rd – 5th February 2015 116.10.2019 Access to Finance for SMEs Challenge and Chance for Policymakers Daniel Stanislaus Martel Private Sector Development and SME Development Policy Advisor Ministry of Commerce and Industries (MoCI) of the Islamic Republic of Afghanistan Private Sector Development Directorate General The Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC)
- 2. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Salaam Alaykom and Welcome How to facilitate Access to Finance for SMEs? Basics and Baselines Current Situation in Emerging Countries Roles for Policymakers Expected Objectives and Outcomes Targeted Impacts 216.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 3. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Learning Objectives After our training, you will be able to… … explain at least three priorities for entrepreneurs … explain at least three priorities for financers … explain at least three objectives for Policymakers 316.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 4. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Our Workshop 416.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Basics and Baselines of SMEs and Finance Attempted Impacts of Policies Expected Objectives and Outcomes Current Situation in Emerging Countries What can Policy- Makers Improve Skills Knowledge
- 5. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Basics and Baselines Definitions What are Micro- and Small- & Medium-Sized Enterprises (SMEs)? What are financial needs for Micro-Es and SMEs? How are Micro-Es and SMEs financed? 516.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 6. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Bases and Baselines: Ways of Financing 616.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Stein (2010), p.7, and Stein, Goland and Schiff (2010), p.8 Smaller enterprise Informal Larger enterprise ShorttermMediumtermLongterm AvailableFinancialOptions Formal Growing Established Microfinance Trade Finance Leasing Private Equity Capital Markets
- 7. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Bases and Baselines: How Finance Works 716.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Stein (2010), p.11 0.1 % 0.9 % 5 – 10 % 20 % 65 – 75 % Corporate & Multinationals Large Enterprises Medium Enterprises Small Enterprises Micro- Enterprises Informal Microfinance Cap.Mrt. PrivateEquity ? SME Finance Gap
- 8. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Current Situation in Emerging Countries Expectations Objectives of Micro-Es and SMEs Dilemmas for finance providers Public Opinion complicating everything 816.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 9. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Current Situation in Emerging Countries Dilemmas for financial providers Business friendly climate: ending obstacles Attracting investment: improving perspectives Promoting exports: finding niches Encouraging industrialization: obtaining reward 916.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 10. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Current Situation – Public Opinion 1016.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Stein (2010), Micro-Enterprises SMEs Financial Institutions Policymakers of the government
- 11. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers Definitions What shall we achieve? Why should we succeed? How should we act? 1116.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 12. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers – Why Succeed? 1216.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author Micro-Enterprises SMEs Financial Institutions Survive, Optimize Grow, Expand Minimize Risks Grow, Expand Business Relationship Mutual mistrust Gulf Iswide ? Policymaker! What do you do?
- 13. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers – How should we act? 1316.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Enabling Facilitating Regulating Coordinating Optimizing Expected Outcomes Objectives
- 14. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers How? Making life for financial entrepreneurs easier Easier banking operations National enterprise/collateral information system Credit Guarantee Scheme Credit/Loan Facility or Fund 1416.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 15. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers – Credit Guarantee Scheme 1516.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Somma (2013), p.25-28 Micro-Enterp. SME Bank or Lender Credit Guarantee Scheme Legislation-governed Agreement/Contract Credit or Financial Facility Pays back amount plus interests Approves Agreement/Contract Pays back In case of failure National or International Back-Up
- 16. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers – Credit/Loan Facility 1616.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Martel (2013) and USAID and Faida (2013 a, b) Credit/Loan Facility National or International Back-Up Micro-Enterp. SME Participating Bank Policy/ToR-governed Agreement/Contract Service provision Agreement/Contract Money made available Credit or financial facility Pays back amount and interests Pays commission for services
- 17. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Expected Objectives and Outcomes From Action to Vision Continue current successful action Listen to Micro-Es/SMEs and financial providers Learning from experience elsewhere Innovate and encourage innovation 1716.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 18. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Targeted Impacts Plausible Perspectives For the Micro-Es and SMEs For the Financial Service Providers For the National Economy For Your Region 1816.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 19. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Targeted Impacts Perspectives for Your Region Countries specialize where they are competitive Transborder exchange increases Regional integration becomes plausible International partnerships become possible 1916.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 20. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Roles for Policymakers – Your Opportunity 2016.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author Policy- maker Micro SME Financial Institution WIN WIN WIN
- 21. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs Conclusions The Future is Yours Higher motivation for Micro-Es and SMEs More opportunities for financial entrepreneurs A more robust national economy Improved regional integration? 2116.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor
- 22. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs W I N Final Conclusion 2216.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor Source: Elaborated by Author based on Abrams (2002), Stein (2010), and Turner (1997) Micro-Es, SMEs Financial Institutions WIN WIN YOU And YOUR Policymaking Impact
- 23. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs “?” “!!” Dr. Daniel Stanislaus Martel CTAP Advisor 2316.10.2019
- 24. Capacity Building in Trade Institutions of Central Asian Countries of COMCEC Istanbul, 3rd – 5th February 2015 Access to Finance for Micro-Enterprises and SMEs It was great working with you! Looking forward to next time! Daniel Stanislaus Martel Private Sector Development Policy Advisor Capacity Developer dmartel@bluewin.ch 2416.10.2019 Dr. Daniel Stanislaus Martel CTAP Advisor