By Atlantic Reports

The World Bank Group has unveiled a strategy to expand financing for micro, small and medium enterprises (MSMEs) in developing countries, with digital technology and business data central to its approach.

World Bank Group President Ajay Banga announced the strategy on Tuesday at an event in Bangkok, Thailand, themed “MSME Financing, Leveraging Data for Jobs”.

He said the objective was to make small businesses visible, connected, enabled and funded, helping them overcome financing barriers, grow and employ more people.

According to Banga, MSMEs account for 90 per cent of firms and employ 75 per cent of workers in developing countries.

“MSMEs are the backbone of all five of these. They can not create jobs without funding. They can not create jobs without the right capacity building,” he said, referring to sectors the institution has identified for their employment potential.

Moving Beyond Property-Based Collateral

Banga put the annual MSME financing gap in developing countries at more than $4 trillion.

He identified high lending costs, collateral requirements, regulatory constraints and limited credit information as obstacles. Many small businesses lack the property and other physical assets banks require, while processing relatively small loans can be costly for lenders.

The proposed approach would help lenders assess enterprises through cash flows and transaction histories rather than relying solely on traditional collateral.

“Digital payments, electronic invoicing and access to tax and utility payment records can establish reliable credit histories for small businesses,” Banga said.

He added that the World Bank would support digital platforms linking enterprises to customers, suppliers, logistics, professional services and finance.

For businesses operating largely in cash or with limited digital access, participation will depend on whether those systems are affordable and accessible. The supplied account did not detail safeguards governing the collection, sharing and use of business data.

Jobs Drive the Financing Push

Banga said 1.2 billion young people in developing countries would reach working age over the next 15 years, while approximately 420 million jobs were expected to be created.

Those figures describe a projected gap, rather than an inevitable outcome. He argued that opportunities to find work, establish enterprises and build livelihoods would influence economic strength and social stability.

The five sectors highlighted were energy and infrastructure, agribusiness, primary healthcare, tourism and value-added manufacturing.

Banga said the institution had committed $40 billion to infrastructure and $24 billion to governance in the previous year. These were broader financing commitments, not a dedicated allocation to the newly announced MSME strategy.

Regulatory Reform and Private Capital

The World Bank Group would also help governments simplify registration, licensing and other business procedures, Banga said.

He reported that, over the preceding three years, the institution had supported 35 countries in reducing bureaucratic bottlenecks, 10 in improving insolvency frameworks and seven in reforming procurement and competition regulations.

He said the group had invested in more than 100 fintech companies and aggregators and was exploring equity investments, lending against business receivables and risk-sharing arrangements.

Banga also reported $112 billion in private capital mobilisation in 2025, alongside $120 billion from the group’s own balance sheet. The account did not identify how much of those totals reached MSMEs.

Reaching Businesses Conventional Lending Misses

“We must reach the roadside mechanic in Nairobi, the seamstress in Lagos, and the exporter in Dakar; entrepreneurs that the traditional model was never designed to serve,” Banga said.

He called for cooperation among payment providers, local financial institutions, intermediaries and investors, particularly in fragile and conflict-affected countries.

The announcement did not specify country-level rollout dates, borrower eligibility, lending terms or a separate funding envelope for the strategy.

For small businesses, its value will depend on whether digital records translate into affordable credit, manageable repayment terms and practical support for growth. Progress will need to be measured through enterprises financed and sustainable jobs created, alongside the technology deployed.

Atlantic Reports: Voices. People. Facts.