According to the Asian Development Bank, financing for small and medium-sized enterprises (SMEs) constitutes 22% of total bank loans in developing economies across the Asia Pacific region. Despite significant strides in financial inclusion in India, for example, less than 11% of SMEs have access to formal credit. In Singapore, the percentage of business loans to SMEs sat at just 10% as of 2022. This highlights a critical gap that, if addressed, could unlock substantial economic potential and empower a vast segment of the entrepreneurial landscape.
Small and medium-sized enterprises (SMEs) make up an astounding 97% of all enterprises, contributing between 40% to 60% to regional GDP and employing over half of APAC's workforce. In Asean specifically, micro, small and medium enterprises (MSMEs) represent 96% of all businesses, providing between 50-85% of non-agricultural employment. These enterprises often serve as crucial entry points for women and young entrepreneurs into the formal economy.
Despite their economic significance, these businesses face a staggering financing gap. The global financing gap for small and medium-sized enterprises (SMEs) is estimated at nearly US$5.7 trillion ($7.65 trillion). When we factor in informal enterprises, this figure rises to an alarming US$8 trillion. In Asia, the credit gap for small and medium-sized enterprises (SMEs) is approximately US$2.7 trillion. Restrictions in access to finance, equity, and payment services primarily drive this significant shortfall.
