The Challenge
Financial exclusion of Women-led / owned Small and Medium Enterprises (W-SMEs) in the global south is a systemic barrier to building sustainable, climate-resilient livelihoods. Despite their critical role in local economies, W-SMEs face a financing gap of $1.9 trillion, equivalent to more than 7% of global GDP, driven by perceived risk and gender bias. Over 70% of W-SMEs report dissatisfaction with financial services due to limited product relevance and low levels of financial literacy. As climate shocks become more frequent and severe, exclusion from financial systems places W-SMEs at further risk. Women entrepreneurs, particularly in high-exposure sectors such as agriculture, are disproportionately affected by climate events. Without access to affordable credit or adaptation solutions, these businesses are unable to build resilience or recover effectively from climate-related adverse events.
Blended Finance in Action
A new $15 million multi-country facility is being designed to unlock access to formal financing for W-SMEs in emerging climate-vulnerable economies. The philanthropically funded facility will offer credit enhancement instruments to Financial Service Providers (FSPs), along with technical assistance to Aggregators / Community Service Organisations (CSOs). Credit enhancement to FSPs will enable W-SMEs’ access to formal affordable credit and build their credit history. CSOs will aim to build W-SMEs’ capacity to manage climate risks, expand market access, and improve operational resilience. By supporting financial institutions to develop commercial, gender-responsive lending models, this facility aims to help close the financing gap and strengthen the economic and climate resilience of W-SMEs. The initial phase of implementation will prioritize India and Indonesia, while concurrently laying the groundwork for expansion into select African countries, in line with donor priorities.
TBFC is leading the end-to-end design and structuring of the facility, ensuring it is ready for fund pooling by defining its structure, jurisdiction, governance, operational approaches, and key terms, while also supporting the identification of the pooling entity and outlining requirements for selecting a suitable facility manager.
