Green Credit Guarantee Schemes for MSMEs
While the use of credit guarantees is a well-known conventional credit enhancement and risk sharing instrument, the global experience of credit guarantee schemes (CGSs) to support the financing of green initiatives of micro, small and medium enterprises (MSMEs) is very limited.
A proper design is crucial to achieving successful green policy goals for MSME financing, while maintaining the ongoing financial viability of operating a CGS. Depending on funding and market situations, there are numerous approaches for implementing a CGS; schemes can be publicly funded and administered, privately administered, or a combination of the two (hybrid).
This special report elaborates on policy considerations for the implementation of a credit guarantee scheme that can be used to support green lending by financial institutions (such as commercial banks, credit cooperatives or microfinance institutions) to MSMEs.
