The White House 

Office of the Press Secretary 

For Immediate Release November 12, 2010 

G-20: Fact Sheet on a New Global Framework to Fund Innovative SME Finance Models 

Today, President Obama, in partnership with Canada, the Republic of Korea, and the multilateral 

development banks, launched a global framework for financing the winning proposals of the G20 SME Finance Challenge and other successful models. This framework provides a vehicle for 

interested donors and investors to support the businesses of the poor and near poor in developing 

countries. So far, $528 million has been committed to the framework. 

 

The core of the framework is the new global SME Finance Innovation Fund. The Innovation 

Fund will be structured flexibly to include grant funding for technical assistance, capacity 

building, and project development and to accommodate funding from different sources. 

Participation by a wide variety of donors and partners will be facilitated. It will also make junior 

tranche funding available for leveraging private SME financing with a view to improving access 

to finance for SMEs on a sustainable basis. The initial focus of the SME Finance Innovation 

Fund will be on implementation of the winning models of the G-20 SME Finance Challenge. 

The International Finance Corporation (IFC), a member of the World Bank Group, will take the 

lead role in structuring and administering the Fund. 

 

More than two thirds of SMEs in developing countries have no access to finance from the formal 

financial sector. Yet rapid growth in SMEs is the most powerful engine of job creation in a wide 

range of economies. These firms are often too small to attract the interest of commercial banks 

or investors, but too large to benefit from microfinance products. To date, few scalable solutions 

to support this “missing middle” tier of businesses have been found. This market failure, the 

large gap between the demand and supply of SME finance, is a serious constraint on efforts to 

promote strong and sustainable global recovery. 

 

To find the best means to reach these “gap” businesses, G-20 Leaders in Toronto launched the 

SME Finance Challenge and committed to mobilize funds for implementation of the winning 

proposals. The Challenge called on the private sector for ideas on how governments and public 

institutions can be more effective in catalyzing private SME finance. The Challenge, funded by 

the Rockefeller Foundation and run by Ashoka Changemakers, is an innovative approach that 

uses the G-20’s reach and convening power to find the best models around the globe. Response 

to the Challenge was very strong with 354 entries received. President Obama, with President 

Lee of the Republic of Korea and Prime Minister Harper of Canada, congratulated the 14 

winners of the competition at a press conference after the Leaders meeting today. 

 

The United States, Canada, and the Republic of Korea are leading the effort to finance the 

G-20 SME Finance Challenge winners.

 

The first contributors to the SME Finance Innovation Fund are the U.S. Agency for International 
Development (USAID), the Government of Canada, and the Government of the Republic of 

Korea with a combined contribution of $26 million. USAID, leveraging its experience with its 

own Development Innovation Ventures, will work with the Challenge winners to prepare their 

initial submissions for financial support by assigning them an Innovation Fellow. 

 

In addition, the Overseas Private Investment Corporation (OPIC) is committed to provide further 

risk capital through co-financing Innovation Fund projects of up to $200 million, subject to 

approval by its Board. And the Korean Export Import Bank (KEXIM) commits to provide cofinancing of up to $100 million, subject to approval by its Board. 

 

Development banks from all regions will also support implementation of the winning 

proposals.

 

The United States, Canada, and the Republic of Korea will be joined by the IFC, the KFW 

Banking Group, the Asian Development Bank (ADB), the Inter-American Development Bank 

(IDB), the African Development Bank, and the European Bank for Reconstruction and 

Development (EBRD), all of which are committed to provide financing as needed for these 

projects, subject to approval by their Boards. In particular, the IDB intends to participate in 

financing for its region with up to $200 million, subject to Board approval. And the Multilateral 

Investment Fund of the IDB will finance capacity-building grants in parallel with the Innovation 

Fund for an amount up to $2 million, subject to internal approval. 

 

All together, OPIC, USAID, the Governments of Canada and the Republic of Korea, and the 

IDB will provide up to $528 million to support innovative SME finance models. 

 

The SME Finance Innovation Fund partners call on other G-20 governments, public and private 

donors, and private investors to join this effort and commit resources to fund the implementation 

of the SME Finance Challenge winners and other successful models.