Financing SMEs for Resilient Prosperity: Rethinking Value, Risk, and Access

Dr. Gene Leon, Executive Director of the DBRP, speaks at an international panel in South Africa with ITC and partners. Photo: PVBLIC Foundation/Ashaki Goodwin

At the recent Global SME Ministerial Meeting in South Africa, Dr. Hyginus “Gene” Leon, Executive Director of the Development Bank for Resilient Prosperity (DBRP), joined an international panel to address one of the most pressing questions for development: How can emerging financial technologies and innovations reshape traditional business models to better meet the needs of SMEs?

Dr. Leon began with a simple but profound truth:

“You cannot build prosperity on a foundation that excludes the very agents of productivity – SMEs. But neither can you finance them using systems that fail to measure what truly matters.”

Drawing on DBRP’s systems-control paradigm — where finance is designed to optimise the productive capacity of people (human capital), nature (natural capital), and economic systems (infrastructure, technology, institutions) — he highlighted three transformational pathways:

1. Tokenisation and Digital Asset Infrastructure

   • SMEs in agriculture, nature-based services, and the circular economy can monetise future productivity — carbon sequestration, ecosystem services, regenerative practices — as investable assets, especially in markets where traditional collateral is absent.

2. Smart Contracts and Decentralised Finance

   • Blockchain-verified contracts can give SMEs — including those in Small Island Developing States (SIDS) — direct access to working capital without delays or costly intermediation.

3. Digital Identities and Alternative Credit Scoring

   • Leveraging open data ecosystems and alternative scoring to expand access for women- and youth-led enterprises, often excluded from formal finance despite strong performance potential.

But technology is not enough without changing the rules of the game. In his call for concrete actions, Dr. Leon proposed:

• Redefining Collateral and Risk: Move beyond physical collateral to performance-linked, resilience-enhancing valuation models. If an SME is investing in climate adaptation or inclusive employment, they are reducing systemic risk — the systems risk-return framework transforms currently perceived non-bankable to bankable investments.

• Building Regional Blended-Finance Platforms: Anchor public guarantees to crowd in private capital for SMEs addressing green, digital, and social challenges.

• Financing the Ecosystem, Not Just the Enterprise: Invest in value-chain infrastructure — shared logistics, digital hubs, cooperative finance — to create systemic resilience and lower risk.

  
  

This vision aligns with the Compromiso de Sevilla and the ITC’s call to expand affordability and diversity of SME finance, enhance financial skills, and promote supportive regulation.

Importantly, PVBLIC Foundation and the International Trade Centre (ITC) formalised a framework agreement at COP 29 in December 2024 to deepen cooperation on exactly these priorities. This partnership strengthens the bridge between policy advocacy, SME capacity building, and innovative finance. With ITC’s on-the-ground presence in over 100 countries and PVBLIC’s expertise in leveraging data, technology, and multistakeholder partnerships, the agreement ensures that systemic solutions like those championed by DBRP are not just discussed — they are implemented at scale, across diverse markets, with SMEs at the centre.

At its core, DBRP’s approach — now reinforced by this PVBLIC–ITC alliance — is about designing what is considered “bankable” and embedding equity, inclusion, and sustainability into financial systems. As Dr. Leon concluded:

“Resilient prosperity must be built on the productive capacity of people, nature, and economic systems — not just financial flows.”