The International Finance Corporation (IFC), with a longstanding commitment to Nepal’s financial sector development, announces its largest-ever investment in the country’s financial institution. The $55 million investment in Siddhartha Bank Limited (SBL) aims to address the pressing need for increased access to finance for small businesses, while also promoting climate finance.
As Nepal’s economy continues to recover from the impacts of the COVID-19 pandemic, facilitating access to finance for micro, small, and medium enterprises (MSMEs) becomes crucial for job creation and inclusive growth. The investment will enable SBL to expand lending to MSMEs, including women-owned businesses, potentially supporting up to 15,000 jobs. Notably, 10% of the loan will be allocated for climate financing across key sectors like electric vehicles, climate-smart agriculture, and energy efficiency.
SBL’s CEO, Sundar Prasad Kadel, acknowledges IFC’s investment as a catalyst for increasing lending to remote and rural areas, as well as diversifying their climate portfolio. With SMEs accounting for 22% of Nepal’s GDP and employing 1.8 million people, the lack of access to finance remains a significant constraint for their growth. Bridging the estimated $3.6 billion SME finance gap will be instrumental in unlocking their potential and driving economic progress.
IFC’s support extends beyond financing, as they will assist SBL in identifying and evaluating green lending opportunities, strengthening the bank’s operations through advisory assistance. Babacar S. Faye, IFC’s Country Representative in Nepal, emphasizes the importance of enhancing liquidity in Nepal’s financial sector while addressing the needs of underserved SMEs. The commitment to expanding SBL’s green finance portfolio aligns with Nepal’s vulnerability to climate change and its net-zero emissions target by 2045, as identified by the Global Climate Risk Index 2021.
IFC’s investment in Nepal’s financial sector has reached over $150 million since 2019, reflecting their ongoing dedication to promoting financial inclusion and supporting the country’s developmental goals.