Women and Climate Finance at the Heart of a New Financial Inclusion Partnership
Manila, Phillipines, December 3, 2024 — The Asian Development Bank (ADB) and the Mastercard Impact Fund, managed by the Mastercard Center for Inclusive Growth, have unveiled a groundbreaking partnership aimed at enhancing financial access for micro, small, and medium enterprises (MSMEs) across Asia-Pacific. This initiative includes a $5 million grant from the Mastercard Impact Fund to support up to $1 billion in ADB financing for lending to financial institutions that cater to MSMEs.
Bhargav Dasgupta, ADB’s Vice President for Market Solutions, stated, “MSMEs are the economic backbone of Asia and the Pacific, yet many face significant obstacles in accessing finance. This collaboration combines ADB’s and Mastercard’s expertise to unlock the full potential of MSMEs, focusing on women-led enterprises and climate finance, thus fostering inclusive and sustainable economic development in the region.”
The financing gap for MSMEs in Asia-Pacific represents 52% of the total shortfall in emerging markets, amounting to nearly $2.5 trillion. Within the region, 43% of formal SMEs remain underserved or unserved by financial institutions. Women-owned MSMEs are particularly disadvantaged, with 70% experiencing considerable difficulties in securing financial backing. Harvard Business Review highlighted that funding for all-women businesses dropped from 4% of total investments in 2018 to 2% in 2021, while transaction volumes involving these businesses have stagnated at 6%.
The Mastercard Impact Fund seeks to bolster ADB’s efforts by providing risk-reducing capital, incentives, and capacity-building resources for financial institutions. These measures aim to mitigate credit risk and encourage lending to underserved MSMEs.
Jon Huntsman, Vice Chairman of Mastercard and Board Director of the Mastercard Impact Fund, noted, “This partnership extends our commitment to empowering entrepreneurs and small businesses, the lifeblood of our communities and economies. By enhancing resilience to climate and economic shocks, we aim to lead more individuals and enterprises toward financial inclusion and prosperity.”
Ari Sarker, President of Asia-Pacific at Mastercard, added, “MSMEs have long been pillars of economic growth but continue to face challenges in accessing the credit needed to thrive. For growth to be inclusive, bridging the MSME funding gap must remain a priority for both the public and private sectors. This partnership marks a significant step in that direction.”
Over the next four years, at least 50% of ADB’s financing will be directed toward women-led MSMEs and climate-related initiatives. Target markets for the partnership include India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Georgia.
This collaboration between the Mastercard Impact Fund and ADB represents a vital stride in addressing the critical financing gaps facing MSMEs in the region. By harnessing their combined resources and expertise, the two organisations are paving the way for sustainable growth and inclusive prosperity across Asia-Pacific.
