Turkey’s Micro Small and Medium Enterprises Continue Benefiting from World Bank Financing with a New Loan
WASHINGTON, December 22, 2015 – The World Bank’s Board of Executive Directors today approved a Micro Small and Medium Enterprise and Large Enterprise Supply Chain Finance Project for Turkey in the amount of US$ 200 million.
The main development objective of the Micro Small and Medium Enterprise and Large Enterprise Supply Chain Finance Project is to improve access to finance for micro, small and medium enterprises (MSMEs), and longer-term finance to large enterprises involved in domestic supply chains benefiting MSMEs.
The project is consistent with and supports the Turkey Country Partnership Strategy (CPS) of the World Bank Group for the FY12-16 period, which includes the strategic objective of enhancing competitiveness and employment by providing medium and long-term funding to MSMEs.
The project will have a single component for the establishment and operation of a credit facility. The final Project beneficiaries will be MSMEs as well as large enterprises (LEs) that implement investments to improve their production and enhancing their competitiveness. The World Bank financing will be provided through the intermediation of Halkbank, which will directly lend to MSMEs and LEs.
“MSMEs are estimated to account for 99 percent of all enterprises in the country and yet they continue to face significant barriers to accessing finance,” said Johannes Zutt, Country Director for Turkey on the occasion of the loan approval. “The World Bank has been working through various channels to support MSMEs and develop the availability of long-term finance in Turkey. By continuing to support MSMEs through a period of growing global economic uncertainty, we hope to promote their ability to grow, compete and create more and better jobs, so that the Turkish economy can continue to rise to higher income status.”
MSMEs are the most affected by access to finance constraints, despite playing a critical role in employment and growth. At the same time, Large Enterprises that lack access to long-term finance are indirectly holding back MSMEs that have been integrated into the Les’ local supply chains. Over the past ten years, the World Bank has provided three credit lines focused exclusively on access to finance for SMEs (SME I – P082822, SME II – P118308, SME III – P130864), out of a total of 13 credit lines. Other credit lines have been focused additionally on exporters and energy efficiency.
The lending instrument for the Project is an IBRD Flexible Loan with a fixed spread and 20year maturity including 4 years of grace period, level principal repayments and a commitment-linked repayment schedule.