World Bank unveils digital strategy to boost MSMEs, create jobs

World Bank unveils digital strategy to boost MSMEs, create jobs

The World Bank Group has unveiled a new strategy to expand access to finance for micro, small and medium enterprises (MSMEs) in developing countries.

The group said that it would use digital technology and data-driven solutions to boost business growth and create jobs.

Ajay Banga, President of the World Bank Group, announced the strategy while speaking at one of the Bank’s flagship event on, “MSME financing, Leveraging Data for Jobs”, in Bangkok, Thailand, on Tuesday.

Banga said the strategy focused on making MSMEs visible, connected, enabled and funded, with the aim of helping small businesses overcome structural barriers to financing, expand their operations and generate employment.

He said MSMEs accounted for 90 per cent of firms and employed 75 per cent of workers in developing countries, making them critical to economic growth and job creation.

He said that the employment challenge would intensify over the next 15 years, when 1.2 billion young people in developing countries would reach working age, while only about 420 million jobs were expected to be created.

According to him, the ability of young people to find jobs, establish businesses and build sustainable livelihoods would determine the strength of economies, trade and social stability in the coming years.

He said the World Bank Group was directing financing towards infrastructure, governance and private capital mobilisation to strengthen the foundations required for businesses to grow and employ more people.

Banga said that the institution committed 40 billion dollars to infrastructure and another 24 billion dollars to improving governance in the previous year, with the investments accounting for more than half of its financing.

He identified energy and infrastructure, agribusiness, primary healthcare, tourism and value-added manufacturing as five sectors with significant potential for job creation, stressing that MSMEs remain central to their development.

“MSMEs are the backbone of all five of these. They can not create jobs without funding. They can not create jobs without the right capacity building,” he said

Banga said MSMEs in developing countries faced an annual financing gap of more than four trillion dollars, attributing the challenge to high lending costs, collateral requirements, regulatory constraints and limited credit information.

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According to him, banks often require real estate and other hard assets as collateral, which many small businesses lack, while the relatively small size of their loans makes lending expensive for financial institutions.

He said digitalisation could help address the challenge by enabling lenders to assess businesses through their cash flows and transaction records rather than relying solely on traditional collateral.

“Digital payments, electronic invoicing and access to tax and utility payment records can establish reliable credit histories for small businesses.

“The World Bank will also support digital platforms that connect MSMEs to customers, suppliers, logistics, professional services and financing, while helping governments simplify business registration, licensing and regulatory processes,” he said.

Banga said that the institution had supported 35 countries to reduce bureaucratic bottlenecks, 10 to improve insolvency frameworks and seven to reform procurement and competition regulations to support MSMEs over the previous three years.

He said that the Group had invested in more than 100 fintech companies and aggregators, while exploring equity investments, loans backed by MSME receivables and risk-sharing arrangements to expand lending to underserved businesses.

Banga further said that the World Bank Group mobilised 112 billion dollars in private capital in 2025, alongside 120 billion dollars from its own balance sheet.

“More investment is needed, particularly in fragile and conflict-affected countries. The 112 billion dollars mobilised in private capital has not been enough because MSMEs are not just part of these economies; they are the backbone.

“We must reach the roadside mechanic in Nairobi, the seamstress in Lagos, and the exporter in Dakar; entrepreneurs that the traditional model was never designed to serve.

“We can not do this alone. We must build an ecosystem of fast payment systems, stronger local financial institutions, trusted intermediaries, and risk-sharing mechanisms that unlock private investment where it is needed most.”