The Role of Guarantee Schemes in Promoting Financial Inclusion: The Impact of Digital Solutions

This policy paper provides an analysis of the role of CGSs in promoting MSMEs financial inclusion and the impact of digital strategies. First, this paper provides an overview of MSMEs financial inclusion in the region and the challenges faced by these firms in accessing formal banking services. Second, it reviews the design and performance of guarantee schemes operating in Egypt, Tunisia, and Lebanon (the target countries for the INVESTMED project). The analysis is based on a comprehensive literature review, desk research, survey and interviews conducted with guarantee schemes operating in these countries and a survey conducted with the entrepreneurs participating in the INVESTMED project. The paper clarifies the guarantee schemes' role in enhancing access to finance for MSMEs and how digital solutions have the potential to enhance their outreach. Finally, it provides policy recommendations on how to strengthen their role.

By Mais Sha’ban, Research Fellow EMEA and Assistant Professor of Banking and Finance at Al-Zaytoonah University of Jordan.

Reviewed by Prof. Rym Ayadi, President and Founder, EMEA and Professor at the Bayes Business School, City University of London