SME Finance Policy Guide

G-20 SME FINANCE POLICY GUIDE
7
CHAPTER A
Policy Guide:
Objectives, Application
The objective of this Policy Guide is to refine and
develop the policy recommendations endorsed by G-20
leaders in Seoul in 2010, to take further account of the
challenges developing countries face, and to produce a
more detailed Policy Guide to guide and support the
implementation of SME Finance reforms. The Policy
Guide is intended as a guide and reference point for governments
and regulators, providing a roadmap for planning,
assessing, and implementing policy and legal
measures to support SME access to finance.
The draft Policy Guide sets out models and accepted or
emerging good practice for policy and legal reforms
and public interventions to support SME Finance. As
such, it can underpin the development of country
action plans and national strategies to improve SME
access to finance. Given the mixed results achieved by
SME Finance policies, reforms, and interventions in
many countries, the Policy Guide incorporates lessons
learned, outlines good practice models, and places
each Policy Guide component in the context of the
issues that it can address, thus offering the potential
for tailored, more cost-effective, and higher-impact
reforms and interventions.
In line with the guidance received from the G-20 SME
Finance co-chairs, there is a focus on Least Developed
Countries (LDCs) 1 running through the Policy Guide,
including the challenges that LDCs face in supporting
SME finance, along with relevant models and recommendations.
The challenges faced by the Middle East
and North Africa region, including job creation and
widening of economic opportunities, also informed
the scope of the Guide as requested by the GPFI cochairs,
with guidance and models provided for public
interventions (such as state banks, guarantee funds,
apex funds), and a set of policy analysis and recommendations
on measures to increase the creditworthiness
and competitiveness of SMEs.
The Policy Guide will be presented in draft to the G-20
leaders at the Cannes Summit in November 2011.
Sequencing, Prioritization
The Policy Guide presented in this paper provides a
comprehensive menu of interventions to support
improved access to finance for SMEs. The significance
of market failures, regulatory constraints,
supervisory weaknesses, financial infrastructure
deficiencies, and financial institution capacity and
behavior, will vary by country and context.
Therefore, diagnostic assessments are necessary as a
first step to inform the selection and sequencing of
tools from this Guide. 2
The capacity of government to implement reforms, of
regulators to effectively introduce and supervise new
or reformed regulations, and of the financial sector to
respond to an improved enabling environment, will
also vary. LDCs in particular may be relatively constrained
in terms of human, institutional, and fiscal
resources to support comprehensive reform programs,
and may need to carefully sequence SME Finance
1 LDC definition and country list in Annex IV.
2 The SME Finance Abatement model is outlined in Annex II. The purpose of the model is to provide a basis on which to calibrate the
effectiveness of policy interventions in a country, by first quantifying the SME finance gap, then determining which interventions should
be targeted, and assessing the effectiveness and cost of implementing such policies to increase access to finance for SMEs.