IFC helps local SMEs through banks: official
IFC helps local SMEs through banks: official
International Finance Corporation (IFC), a member of the World Bank Group, will continue to cooperate with local banks to expand small-medium enterprise (SME) development in Laos, according to a senior official.
Director of IFC's East Asia and Pacific Department, MrVivekPathak explained on Tuesday in Vientiane that his organisation supports Laos' sustainable economic development by investing in commercial enterprises.
IFC does not lend directly to SMEs, we are not structured in a way to be able to lend to SMEs so we typically lend to SMEs through financial intermediaries, which is banks, microfinance institutions, non-banking finance companies, MrPathak stressed.
So in Laos IFC is trying to work with banks in particular. It has now started relationships with several and will continue to further expand these relationships.
He said typically IFC would provide finance to a bank or microfinance institution and they would then on-lend to micro-companies and SMEs.
The other way IFC supports SMEs is through a credit programme that can sometimes set up lines of credit for commercial banks with the ultimate beneficiaries being SMEs.
This would facilitate greater opportunities for SMEs as well as boost national economic growth.
SMEs play a crucial role in any financial system, even in the USA today, which is a very developed economy SMEs make up a large proportion of the economy.
Since 1998, IFC has provided more than US$60 million in equity and loans indirectly to Lao companies, which has helped improve the country's investment climate to attract more quality foreign investors.
IFC works with banks and other financial institutions as well as related government authorities to improve access to financial services among business.
IFC is also a ssisting SMEs, which make up more than 90 percent of Laos' private sector, by helping to set up an online movable collateral registry. The registry makes it easier for borrowers to obtain loans by pledging equipment and inventory, rather than land titles or property as collateral.
In Laos, IFC serves sectors such as infrastructure including hydropower and transport, along with banking, financial services, manufacturing and tourism.
