Donor Funding | Aspen Network of Development Entrepreneurs

Donor funding for SME-related projects increased by 22 percent in 2017

For more on how ANDE calculates SME-related and entrepreneurship related disbursements, see the Methodology section.

From 2013-2017, over one-third of SME-related funding was allocated to Turkey.

Turkey has consistently received the largest amount of SME-related donor disbursements over the past 10 years. Pakistan, Bosnia & Herzegovina, and Vietnam have been notably pushed out of this top 10 group, replaced by Afghanistan, Uzbekistan, and Brazil. Based on this data, it appears that SME funding is heavily going towards middle income countries (with a few exceptions). There also seems to be a divergence in trends geographically based on this data between where donors are directing their funding efforts versus where ANDE members are focusing. There are notably no countries in this list from sub-Saharan Africa; however, 191 ANDE members (65 percent) are supporting SGBs in Africa which indicates that there is both significant activity and opportunity in the region.

Total Amount of SME-Related Donor Disbursements (USD Millions)

East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa

When put into perspective, gender-related SME donor funding is actually a very small percentage of all SME-related disbursements

Donor Gender Initiatives

Notable donor-supported activities focused on SGBs with a gender lens in 2018 included:

The Women Entrepreneurs Opportunity Facility (WEOF) is a joint initiative between the International Finance Corporation (IFC) and Goldman Sachs Foundation, launched in 2014, that aims to address the financing gap faced by women entrepreneurs. The goal of WEOF is to provide access to capital for 100,000 women over its ten-year span to foster economic development. In the second year, the Overseas Private Investment Corporation (OPIC) joined the initiative. As of 2018, the project had reached 50,000 women entrepreneurs through the financial institutions that received investment. With six years left to run, the initiative has already invested $990 million into 26 financial intermediaries in 26 countries; the original target was $600 million.[13]
The Women Entrepreneurs Finance Initiative (We-Fi), supported by the World Bank, harnesses the public and private sectors to open new doors for women entrepreneurs across the developing world. In 2018, the fund made its first allocation of US $120 million, expected to mobilize $1.6 billion in additional resources. This initial round focuses on improving the business environment for women entrepreneurs in Sri Lanka as well as working with the Islamic Development Bank to support women entrepreneurs in Yemen, Mali, and Nigeria.[14] The government of Canada has committed $20 million to the initiative “to provide financial support, training and networks to women-owned and -led small and medium-sized enterprises in developing countries.”[15]

10 top donors by SGB-support disbursed in 2017

Digging Deeper into Institutional SGB Sector Support

ANDE uses the OECD CRS database to track annual donor support for the SGB sector. The CRS database is useful for this analysis due to the database’s standardization of project information across donors, providing the ability to apply a consistent coding for SME- and entrepreneur-related support. However, not all public organizations report to the OECD, and some major international public agencies, in particular Development Finance Institutions (DFIs) including the Overseas Private Investment Corporation (OPIC) and the European Investment Bank (EIB), are excluded. ANDE therefore partnered with Devex in 2018 to dig deeper into twenty key international institutions providing support for the SGB sector.[1]

According to this research, these 20 multilaterals, bilaterals, and DFIs disbursed US $7.4 billion to support SMEs 2017, compared to the $4.9 billion provided by donors in the OECD database, showing the importance of DFIs and multilaterals in supporting the sector. The EIB alone disbursed US $2.1 billion towards SMEs primarily through equity, loans, loan guarantees, and investments into funds.

This data, augmented with interviews with representatives of the donor institutions, also allowed for an examination of major trends in how these donors approach SGB support:

SGB support is seen as a means to an end for other development outcomes. SGB funders see entrepreneurship and SGB development as a way to achieve outcomes in other sectors, such as agriculture or energy, rather than as an end in itself. In particular, there is an interest in SGBs as a means to focus on traditionally excluded groups such as women and youth, as well as to support Sustainable Development Goal 8, “Decent Work and Economic Growth.” This is also reflected structurally among donor institutions, with few organizations having a department or office that specifically focuses on SGBs or even on SMEs.
Many DFIs are currently creating new investment mechanisms to allow them to make smaller, riskier investments relative to the rest of their portfolios, since DFI deals typically have a minimum investment requirement of US $5 million, which is well above the capital sought by most SGBs. The most common indirect channels used by DFIs for SGB support include investing in local financial institutions or investing in funds that specifically focus on early-stage investments in the developing world.
Increasingly, donor institutions are looking for opportunities to integrate disruptive technology verticals within other sectors of interest, most popularly AgTech, FinTech, and EdTech. While many donors have an explicit sector focus for their technology verticals, the integrated and cross-cutting nature of technology means that these often fall under programs and offices targeting “innovation” more broadly. For example, the European Investment Bank recently shifted to a focus on early-stage innovation and made a direct investment in M-Birr, an Ethiopian mobile money service in the FinTech space.