Priority lending programs

Policy Instruments


By encouraging financial intermediaries to carry out targeted lending programs, governments can promote access to finance for inclusive businesses. Priority lending programs can allocate a certain portion of a country’s total lending budget to a few key sectors or regions where inclusive businesses tend to be most active, such as agriculture, health, education, energy, water, and sanitation. 

Additionally, governments can increase access to finance for inclusive businesses by encouraging banks to directly support these businesses in specific regions or communities and by attracting banks and other mainstream institutions to invest in funds that finance them. It is important to note that improvements in access to finance for inclusive businesses are not dependent on banks alone, but there is also a growing group of non-bank financial institutions (NBFIs) funding these businesses.

Case Example

Turkey: Enhancing access to finance for MSMEs

Launched in October 2010, the Greater Anatolia Guarantee Facility (GAGF) aims to facilitate MSMEs access to finance in Turkey’s developing regions. A partnership between the Republic of Turkey, the European Union Commission, and four Turkish banks, the goal of the GAGF is to enhance access to finance for SMEs and micro-enterprises in the less developed regions of Turkey by generating EUR 938 million in loans. GAGF covers 43 developing provinces which are home to 25% of Turkey’s MSMEs, but who historically receive only 10% of the country’s MSME lending.

The GAGF provides portfolio guarantees and loans to SMEs through the four selected banks. The European Investment Fund also provides a counter-guarantee to Kredi Garanti Fonu of Turkey to issue guarantees to micro loans. SME access to finance components are complemented by a capacity building component targeted at the partner banks, Kredi Garanti Fonu and the Internal Trade of the Ministry of Customs and Trade.

Between 2011 and 2013, over EUR 440 million was provided to more than 5,300 micro enterprises and SMEs. GAGF is a successful example for blending of public and private funds, with an important leverage ratio of more than 20 times.


Additional Resources