ADB Signs Deal with MicroCred China to Improve Access to Finance of MSMEs in Western PRC | Asian Development Bank

ADB Signs Deal with MicroCred China to Improve Access to Finance of MSMEs in Western PRC

News from Country Offices | 5 December 2018

CHENGDU, PEOPLE’S REPUBLIC OF CHINA (5 December 2018) — The Asian Development Bank (ADB) today signed a $20 million (in Chinese yuan equivalent) loan agreement with MicroCred China to provide much-needed micro and small loans to individual entrepreneurs and micro, small, and medium-sized enterprises (MSMEs) in the western regions of the People’s Republic of China (PRC).

The agreement was signed by ADB Private Sector Operations Department Deputy Director General Mr. Christopher Thieme and Microcred China Chairman Mr. Arnaud Ventura at a ceremony in Chengdu.

“Microfinance and MSME growth goes hand-in-hand with inclusive growth particularly in parts of the country which need them most,” said Mr. Thieme. “ADB’s assistance to MicroCred China will help open up avenues for financing to entrepreneurs and MSMEs in western PRC, helping to fuel their development and thereby boost the broader economy.”

“Microcred China has been providing loans to micro-entrepreneurs and SMEs in Sichuan province since more than 10 years and has gained the trust of clients, authorities, and lenders. This support from ADB is very important for us to diversify our funding mix with reasonably priced funding from an internationally renowned institution,” said CEO of Microcred China Mr. Bodo Lieberam.

Micro and small businesses face barriers in accessing credit due to the banking sector’s aversion to risks associated with lending to small entities. In 2017, credit to SMEs only accounted for about 24.7% of total bank loans in the country. Small businesses in underdeveloped western regions of the PRC also face higher borrowing costs than those in eastern provinces.

ADB’s assistance will provide longer-tenor financing to operating subsidiaries of MicroCred China to support their microfinance and MSME lending operations in western PRC. By improving access to finance the loan will promote entrepreneurship, support the expansion of micro and small businesses, and generate new jobs that boost incomes and reduce poverty.

MicroCred China, established in 2007, provides financial products and services to micro and small entrepreneurs excluded from the traditional financing system. The microloans provided by the company offer financial support to a range of small businesses in western PRC, including in trade, services, manufacturing, and agriculture.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.