ADB signs deal with MicroCred China to improve access to finance of MSMEs in Western PRC

The Asian Development Bank (ADB) signed on 5 December a $20 million (in Chinese yuan equivalent) loan agreement with MicroCred China to provide much-needed micro and small loans to individual entrepreneurs and micro, small, and medium-sized enterprises (MSMEs) in the western regions of the People’s Republic of China (PRC).

The agreement was signed by ADB Private Sector Operations Department Deputy Director General Mr. Christopher Thieme and Microcred China Chairman Mr. Arnaud Ventura at a ceremony in Chengdu.

“Microfinance and MSME growth goes hand-in-hand with inclusive growth particularly in parts of the country which need them most,” said Mr. Thieme. “ADB’s assistance to MicroCred China will help open up avenues for financing to entrepreneurs and MSMEs in western PRC, helping to fuel their development and thereby boost the broader economy.”

“Microcred China has been providing loans to micro-entrepreneurs and SMEs in Sichuan province since more than 10 years and has gained the trust of clients, authorities, and lenders. This support from ADB is very important for us to diversify our funding mix with reasonably priced funding from an internationally renowned institution,” said CEO of Microcred China Mr. Bodo Lieberam.

Micro and small businesses face barriers in accessing credit due to the banking sector’s aversion to risks associated with lending to small entities. In 2017, credit to SMEs only accounted for about 24.7% of total bank loans in the country. Small businesses in underdeveloped western regions of the PRC also face higher borrowing costs than those in eastern provinces.

ADB’s assistance will provide longer-tenor financing to operating subsidiaries of MicroCred China to support their microfinance and MSME lending operations in western PRC. By improving access to finance the loan will promote entrepreneurship, support the expansion of micro and small businesses, and generate new jobs that boost incomes and reduce poverty.

Original source: ADB
Published on 5 December 2018