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

Rob Katz — Fri, 18 Jan 2008 08:25:18 -0500

Both 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.

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