Increasing MSME access to climate finance

This policy brief, written by Dalberg Global Development Advisors for the Climate and Development Knowledge Network, outlines design options for the Green Climate Fund's (GCF) MSME Program. It identifies barriers preventing micro, small and medium enterprises (MSMEs) in developing countries from accessing climate finance and proposes solutions across enabling environments, knowledge gaps, and financial product design to increase private sector involvement in climate action.

• MSMEs are critical to climate action in developing countries because they represent 90% of private businesses in those regions, meaning small operational changes can have a significant overall impact.
• Access to climate finance for MSMEs is restricted by three primary barriers: weak enabling environments (including poor policies and financial infrastructure), limited knowledge and awareness of opportunities, and financial products that are poorly suited to MSME needs due to high costs and risks.
• To increase finance flow, the GCF can implement solutions such as supporting national climate strategies and green incentives, creating matchmaking platforms to link investors with investees, and using risk-sharing instruments like grants and first-loss investments.
• High transaction costs associated with small ticket sizes for a vast number of entities (over 350 million MSMEs in developing countries) require the GCF to prioritize investments through local financial intermediaries and investment aggregators to maximize efficiency.
• Because nearly 300 million MSMEs in developing countries operate in the informal sector, the GCF must move beyond traditional financial products and test alternative collateral approaches and credit worthiness assessments.
• The trade, agriculture, and manufacturing sectors have the highest concentration of MSMEs in developing countries. Within climate technology, wastewater, small hydropower, and water technologies are projected to support the highest number of MSMEs over the next decade.
• The GCF's MSME Pilot Program should be used to test new approaches for reaching informal MSMEs and identifying specific investment opportunities at a small scale to reduce failure risks and maximize learning before full implementation.

APA

Climate and Development Knowledge Network (2015). Increasing MSME access to climate finance. https://cdkn.org/sites/default/files/files/20150924-MSME-Policy-Brief-vF-2.pdf

Chicago

Climate and Development Knowledge Network. Increasing MSME access to climate finance. 2015. https://cdkn.org/sites/default/files/files/20150924-MSME-Policy-Brief-vF-2.pdf.

Wikipedia

{{cite report |author=Climate and Development Knowledge Network |title=Increasing MSME access to climate finance |date=September 2015 |url=https://cdkn.org/sites/default/files/files/20150924-MSME-Policy-Brief-vF-2.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climateanddevelopmentknowledgenetwork2015increasing, author = {{Climate and Development Knowledge Network}}, title = {{Increasing MSME access to climate finance}}, institution = {Climate and Development Knowledge Network}, year = {2015}, month = sep, url = {https://cdkn.org/sites/default/files/files/20150924-MSME-Policy-Brief-vF-2.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }