Rob Katz

Google.org: Fuel the Growth of Small and Medium Sized Enterprises

GoogleLogoBoth the New York Times and Emeka Okafor’s Timbuktu Chronicles point out Google.org’s newly-announced philanthropic commitment to small and medium-sized enterprises. From the Google.org web site:

Small and medium sized enterprises (SMEs) are critical for creating more equitable economic growth. SMEs create opportunities for more people to participate in the formal economy and help reduce poverty by creating jobs. In many developing countries large businesses have access to formal, bank-based credit and capital markets while households and micro-entrepreneurs have access to micro-loans. This leaves a massive gap known as the “missing middle.”

While SMEs in rich countries represent half of GDP, they are largely absent from the formal economies of developing countries. Today, there are trillions of investment dollars chasing returns–and SMEs are a potentially high impact, high return investment. However, only a trickle of this capital currently reaches SMEs in developing countries. Our goal is to increase this flow.We want to show that SMEs can be profitable investments. We will do this by focusing on lowering transaction costs, deepening capital markets to increase liquidity, and catalyzing capital for investment.

We at NextBillion applaud Google.org’s commitment to what we think is a tremendous opportunity for investors, philanthropists, companies and development agencies. In fact, we’ve been talking about this very “missing middle” for a while now – even going so far as to call it the “mesofinance gap” in a few articles.

NextBillion also congratulates TechnoServe, which received Google.org’s first “missing middle” grant ($3 million). We are confident that TechnoServe – a NextBillion ally – and its estimable CEO, Bruce McNamer, will put these funds to good use.

Other grantees in Google.org’s SME “missing middle” portfolio include Acumen Fund and the Grameen Foundation. For more on Google.org’s thinking on this aspect of its giving, check out their 3-page issue brief (PDF) and a related YouTube video.

With the announcement of Google.org’s philanthropic intentions, those of us in the NextBillion and BoP communities have yet another reason to root for Google stock to continue its rise…as if we have anything to do with that

Via New York Times and Timbuktu Chronicles

Also see coverage in:
San Francisco Chronicle
Forbes
Wall Street Journal
Washington Post
Wired News

Categories
Education
Tags
academia