The World Bank Group has teamed up with 19 global insurance companies to launch a $6 billion credit insurance facility aimed at expanding lending to small and medium-sized businesses in emerging markets, according to a press release from the International Finance Corporation (IFC). The deal — IFC’s largest single mobilisation agreement to date — is expected to unlock up to $10 billion in new lending to banks and financial institutions serving micro, small and medium-sized enterprises (MSMEs).
The facility works by having participating insurers share credit risk on eligible IFC loans, freeing up capital that IFC can then redeploy into new lending. MSMEs make up over 90% of all businesses and account for around 70% of global employment, yet many still struggle to access financing. IFC Managing Director Makhtar Diop said the facility shows how public and private partners can work together to reach businesses that need capital most while giving insurers a chance to diversify their portfolios.
Insurers taking part benefit from IFC’s due diligence process, cutting the cost and time of assessing deals in less familiar markets. The 19 partners include AIG, Allianz Trade, AXA XL, Chubb, Munich Re, Swiss Re and others spanning North America, Europe and Asia.
The transaction is the fifth under IFC’s Managed Co-Lending Portfolio Programme (MCPP) for credit insurers, bringing total mobilisation under the programme to $15.5 billion since its launch in 2017. The broader MCPP platform has now grown to $25.5 billion in capacity, making it one of the largest private capital mobilisation vehicles run by a multilateral development institution.
