Investing in Employment in the Middle East and North Africa Region

SANAD Entrepreneurship Academy

Fund Rationale

Too big for MFIs, too small for banks

Preserving and generating jobs is quite unthinkable without micro, small and medium enterprises (MSMEs) – and a vibrant enterprise sector is at the heart of any effort to promote economic growth. However, small enterprises often hit a wall at a crucial stage of growth as they graduate from the micro stage. As they graduate from the micro stage, their financial requirements tend to exceed the scope of microfinance institutions (MFIs). Yet they are still too small and too informally structured to utilize standard lending products and adopt the procedures of commercial banks – they fall into the ‘missing middle.’

Tapping the potential

Investing in MSME growth is not only key to accelerating economic development – it also has the potential to deliver solid returns. The ‘missing middle’ represents a vast source of growth for the financial sector because risk of lending to MSMEs is much lower than commonly perceived by potential lenders. With targeted financing solutions and hands-on assistance, the SANAD for MSME enables commercial banks to widen their client base at the lower end of the scale, and MFIs to accompany their customers further along the growth curve – by building on existing knowhow to develop the knowledge and tools as well as innovative lending technologies to better serve MSMEs.

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