Ben Leo: How Private Foundations Can Best Support SME Development in Poor Countries

Private foundations interested in investing in financial access initiatives targeting small and medium-sized enterprises should reconsider before putting money into entirely new projects or strategic approaches, given the breadth of existing public donor-funded SME development schemes, according to a research fellow at the U.S.-based think tank, Center for Global Development.

“Interested groups instead should strive to leverage existing best practices and program resources (ex – U.S. and IFI programs) to the greatest extent possible to support their broader program objectives or specific entrepreneur stakeholders,” Ben Leo writes in a working paper that discusses ways private foundations can engage in SME development efforts.

“In addition, strong consideration should be given to launching new partnerships that build off of these existing programs,” Leo adds.

Leo identifies three incremental approaches that he says private foundations should consider:

- Becoming coordinators or facilitators that connect entrepreneurs with existing SME financing initiatives and technical assistance programs.

- Launching formal partnerships with the United States and other donors to implement financing programs targeting specific entrepreneur populations.

- Creating new debt and equity funds, in collaboration with international financial institutions, for SMEs in developing countries.

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About the author

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    Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.