The Obama Administration is intensely focused on creating jobs and growing the economy so that Americans have more and better pathways to reach their goals.
At home, our efforts are centered on expanding exports, supporting small businesses, and promoting entrepreneurship and private innovation to spur growth.
Abroad, we are also working with our partners to aid the poor and generate private sector opportunities because we know that a more stable and prosperous global economy will benefit Americans while also lifting lives.
Since we know that small businesses are big engines of growth and job creation, one of the best ways to increase prosperity is to find ways to further support their development and success. Improving access to finance for small businesses is critical in this regard. Finance is the lifeblood of entrepreneurship and job creation—it allows poor households and businesses to gain access to credit, savings, payment systems, and insurance to help them weather crises and take advantage of opportunities. The challenge today is to identify new ways to connect small- and medium-sized enterprises (SMEs) with finance.
Based on this need, President Obama recently joined with our partners in the G-20 to launch the G-20 SME Finance Challenge. The Challenge will identify new ideas to finance small businesses and help them grow, and will award the best ideas and scale them up. The private sector’s input is central to the success of the Challenge. The Administration and the G-20 recognize the critical role that the private sector can play in identifying viable models for this effort and others, and seek to promote innovation on a range of pressing problems through challenges and prizes.
How will the Challenge help businesses? A fruit processor and exporter in South America is a good example. The company purchases mangos, avocados, and pineapples from more than 450 local, small-scale farmers, and employs over 3,000 workers during the harvest season. Yet it was seasonal work so workers’ incomes were seasonal as well. Thanks to investments by the Small Enterprise Assistance Fund, with USAID and Overseas Private Investment Cooperation support, the company could expand its existing fresh mango packing plant and open a freezing plant that allowed it to expand to a year-round workforce.
Importantly, the Challenge will reach a set of businesses that are particularly starved for finance in the developing world. These are the businesses that are either too large for microfinance products or too small to interest most banks and investors. Many have tremendous potential to grow and create jobs, but they need finance to take their businesses to the next step.
Thanks to the efforts of Ashoka Changemakers and the Rockefeller Foundation, we will soon have more good ideas to implement that will make a difference in the lives of millions of entrepreneurs and the people they employ. Please help us spread the word about the Challenge, and we look forward to sharing the best ideas and results that emerge.
Lael Brainard is Under Secretary for International Affairs at the U.S. Department of the Treasury
The SME Finance Challenge was launched by G-20 leaders at their Toronto summit in June. Entries are being accepted through August 25. For more information and to submit your proposal, visit: www.changemakers.com/SME-Finance.
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