The Global Shield Financing Facility's Stories of Impact | Shock-Responsive Finance for Micro, Small, and Medium Enterprises: Our Impact in Burkina Faso

14 November 2023

Burkina Faso is home to a vast informal micro, small and medium enterprise (MSME) sector that includes over 1.4 million businesses. However, of the 65,000 formal enterprises in the country, only 500 generate an annual turnover exceeding CFAF 1 billion (US$1.8 million). The country has been facing a deteriorating security landscape while also witnessing a staggering increase in internally displaced persons (IDPs). A US$12 million Global Risk Financing Facility (GRiF) grant, embedded within a larger US$100 million World Bank operation, supports Burkina Faso’s MSMEs by facilitating continued access to credit during a climate-related shocks, so they can continue business activity after the shock. This grant supports Burkina Faso’s crisis window to be open during climate-related crises within an existing Partial Credit Guarantee Scheme (PPCG), and to create a linked loan restructuring facility, primarily aiming at safeguarding banks and microfinance institutions from the compounded risk of drought and other significant climate risks.

Building resilience of the MSME sector

The newly introduced Crisis Response Window within the credit guarantee fund was first financed by US$10 million International Development Association (IDA) resources tailored to aid small businesses severely impacted by the COVID-19 pandemic. This initiative has become fully operational and safeguards a US$3.52 million loan portfolio affected by the COVID-19 crisis. Designed to cover restructured loans, with the support of the US$12 million GRiF grant, it also offers short-term working capital to MSMEs showing resilience and potential to recover from climate-related challenges such as droughts. Moreover, the country is collaborating with the African Development Bank and the African Risk Capacity to train key decision-makers in the fundamentals of disaster risk finance (DRF) and to undertake a comprehensive DRF diagnostic. These activities are laying the foundation for a more resilient Burkina Faso.

Complementary initiatives

The upcoming GRiF-funded crisis window channel for climate-related shocks will complement other initiatives supporting the agricultural sector’s access to finance and its climate resilience. These combined efforts will provide comprehensive support to address the multifaceted challenges faced by the nation’s MSMEs.

Enhancing the PPCG

The Global Shield Financing Facility (GSFF)’s contribution has bolstered Burkina Faso’s PPCG, which initially had US$35 million in capital. This fund guarantees bank and microfinance institution loans to MSMEs, businesses in the agriculture sector, and women entrepreneurs. It creates a safety net for these vital enterprises, allowing them to access essential financial resources.

GSFF is playing a pivotal role in securing the future of Burkina Faso’s MSMEs and strengthening the country’s overall resilience to climate risks. By strengthening credit guarantees, providing crisis response mechanisms, and fostering comprehensive DRF strategies, GSFF is helping to ensure that these vital enterprises continue to thrive, even in the face of adversity. Beyond merely shielding businesses, this comprehensive support aids in fortifying the nation’s economic pillars, propelling Burkina Faso toward stability and growth.

Kaavya Ashok Krishna

Senior Financial Sector Specialist

World Bank Group

Kaavya Ashok Krishna a Senior Financial Sector Specialist working in the Finance, Competitiveness, and Innovation (FCI) Global Practice based in Washington Dc. She leads Capacity Strengthening, Knowledge exchange, and Communications on Crisis and Disaster Risk Financing (CDRF).

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Kaavya launched the Financial Protection Academy which has trained over 30,000 clients from 60+ countries in CDRF. She has previously worked in leadership development and marketing roles at The United Nations, Warner Bros Media, The Indian Express, Sify and Ogilvy, and Mather. She holds a Bachelor’s degree in Communications from the University of Madras, a Master’s degree in Technology and Learning from Harvard University.

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Co-Authors

Anusha Vincent

Bio :

Anusha Vincent, a Communications and Knowledge Management Consultant, contributes her expertise to the World Bank Crisis and Disaster Risk Finance team within the Finance, Competit

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iveness, and Innovations Global Practice. Her primary objective is to expand the team's global reach and maximize the impact of their projects. Anusha undertakes a wide range of responsibilities, including the creation of technical notes, annual reports, year-in-review mailers, videos, newsletters, and news releases, among other essential tasks. She also helps manage her team’s websites. Anusha played a pivotal role in conceiving the 'In the Spotlight' interview series, a platform designed to showcase noteworthy projects and champions of Disaster Risk Finance. She has more than 10 years of experience as a journalist and has worked with esteemed Indian newspapers such as the Times of India and Deccan Chronicle. Her transition from journalism to the world of Disaster Risk Finance reflects her passion for making meaningful impact.

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