The importance of micro, small, and medium-size enterprises (MSMEs) to economic development and job creation is increasingly recognized. In developing countries, formal MSMEs represent approximately 45 percent of employment and approximately 33 percent of GDP. This is even greater when informal MSMEs are included. Despite their importance, this article finds that the total unmet need for credit by all formal and informal MSMEs in emerging markets today is significant – in the range of $2.1 trillion to $2.5 trillion.
The first goal of this article is to offer what we believe is the first comprehensive assessment of the global MSME credit gap, including key insights regarding the somewhat bifurcated nature of the challenge that the MSME credit gap represents. We also offer some implications for public- and private-sector actors as they seek to close that gap. The work draws on existing data from local government sources, literature reviews, and the research and insights of IFC and McKinsey colleagues.
This article is the result of a joint effort of McKinsey and IFC, a member of the World Bank Group.