International Finance Corporation Launches Call for Expression of Interest for Catalytic First Loss Guarantee Facility

Context:

International Finance Corporation Launches Call for Expression of Interest for Catalytic First Loss Guarantee Facility.

• Objective:
  • The IFC has launched a call for eligible financial services providers (FSPs) to participate in its new Catalytic First Loss Guarantee Facility, which is part of its MSME Finance Platform. The facility aims to enhance access to finance for women-owned businesses, promote agriculture and climate financing, and support MSME lending.
• Key Goals:
  • Increase access to finance for underserved sectors, including MSMEs.
  • Demonstrate the commercial viability of MSME lending, especially in agriculture and climate-related projects.
  • Experiment with new products, services, and risk criteria to scale up lending.
• Facility Details:
  • Offers a first loss guarantee to eligible FSPs, encouraging them to scale MSME lending, contributing to economic growth and job creation.
  • MSMEs account for over 90% of firms globally, contribute 70% of total employment, and represent 50% of global GDP.
  • The MSME finance gap is estimated at $5.7 trillion, expanding to $8 trillion when informal businesses are considered.
• Eligibility:
  • FSPs such as regulated banks, non-bank financial institutions, digital lenders, leasing companies, and microfinance institutions can apply.
  • FSPs must meet IFC’s qualifications, including compliance with Environmental & Social Risk Ratings (ESRR), Integrity Due Diligence (IDD), and financial capability.
• IFC Overview:
  • IFC, a part of the World Bank Group, committed $56 billion to private sector development in FY 2024 and operates in over 100 countries globally.