Entrepreneurs, and especially the owners of small enterprises which have the best potential to lift people out of the informal economy into decent jobs, often find  that they cannot get the capital they need. Banks prefer to deal with larger corporations, because of  lower transaction costs and perceived risks. The market fails to generate enough information about the real risk and yield in financial transactions with small and medium enterprises.  

In response, the Social Finance Programme encourages innovation and knowledge sharing about new, more appropriate financial products, like microleasing, microequity, mutual guarantee systems etc. We see our role as facilitators of the information flow about new ideas and successful experiments. In this context risk-sharing mechanisms play a key role: they are essential to bringing banks closer to small and medium enterprises.

In the absence of risk-sharing mechanisms a lender will not get any reliable information about the creditworthiness of a client, unless there is a minimum institutional infrastructure like property rights, accessible contract law, collateral and bankruptcy laws, credit bureaux and registries to document ownership status. The Social Finance Programme works out policy options to up-grade and modernize the institutional infrastructure for small enterprise finance.