Mastercard Inc. MA and partners N-Frnds, SGeBIZ and Finastra have entered into an agreement with the Asian Development Bank (ADB) to provide funds for small and medium enterprises (SMEs) in Asia.
SMEs are at the receiving end of the COVID-19-led business disruption, which affected their supply chains and trade networks. These enterprises account for 90% of all global businesses, employing about half of all the workers and delivering more than 50% of GDP.
The drying up of overall demand among the consumers caused a funding gap between the banks and SMEs. Even in the pre-COVID-19 times, the ADB estimated that there was a huge $1.5-trillion fund crunch in 2018 because of major challenges in accessing cheap finance due to asymmetric information problem between suppliers and demanders of funds and high transaction costs.
The International Chamber of Commerce estimates a potential $2-$5 trillion shortfall in trade financing through 2021 if demand