Türkiye’s strong small business base empowers economy: World Bank, IFC officials

Turkish small and medium-sized enterprises (SMEs) make up most businesses in the country, playing a decisive role in many areas of the economy, ranging from employment to production, whether in small towns or major cities, financial leaders told Anadolu.

The UN General Assembly adopted a resolution in April 2017 to celebrate Micro-, Small, and Medium-Sized Enterprises (MSMEs) Day, first observed on June 27, 2017, to underline SMEs' contributions to the global economy and sustainable development.

This year, the special day will be celebrated on Saturday under the theme of "Empowering MSMEs through Innovation and Sustainable Industrial Development."

The UN says SMEs make up 90% of businesses worldwide and account for around 70% of employment, while contributing 50% of global gross domestic product (GDP).

Humberto Lopez, Türkiye country director at the World Bank (WB), told Anadolu on the occasion of the UN's MSMEs Day that small businesses make up the backbone of the Turkish economy, providing 70% of total employment.

Lopez stated that implementing policies to empower SMEs is not only an economic but also a social priority, as it requires simultaneous action across many areas, where the WB can play an active role by combining public and private sector tools.

He noted that the WB works in public policy, institutions, guarantee mechanisms, and crisis response, while the International Finance Corporation (IFC) supports private sector investments, financial institutions, and capital markets. He said the combined approach is key to supporting a large and dynamic economy like Türkiye's.

Lopez stated that SMEs across the globe face challenges accessing finance, including those in Türkiye, while making up a significant portion of businesses worldwide.

He said the SME financing gap in developing economies reaches trillions of dollars, and Türkiye faces a similar challenge, citing WB data. He advised that implementing public policies, guarantee mechanisms, a robust data infrastructure, financial inclusion, and rapid support mechanisms is significant in helping SMEs through crises.

He noted that WB-backed initiatives in 2020-2023 injected financing into over 87,000 MSMEs in Türkiye, helping create or preserve around 115,000 jobs during the COVID-19 pandemic and after the February 2023 earthquakes in the nation's southeast. He mentioned that 77% of new hires were workers under the age of 30 and 61% were women.

Lopez stated that some 40,000 MSMEs, especially those in disaster-stricken zones, received $450 million in post-earthquake project financing from the WB, as businesses in the affected region faced not only physical damage but also disruptions to market connections, access to labor, supply chains, and cash flows.

He urged SMEs to embrace digitalization, create formal and skilled jobs, and strengthen their resilience against disasters and economic shocks, as financing alone is not enough to ensure success. He advised small businesses operating in low-tech production, which make up a large share of SMEs in the manufacturing sector, to realize their potential for gains in productivity, digitalization, and higher value-added production.

He added that making Türkiye's already strong SME base more efficient, resilient, and inclusive through policies boosting these areas and offering more targeted solutions for groups and regions in need of support, such as women, young people, and businesses in disaster-affected areas, will be key to sustainable growth.

Lisa Kaestner, division director for Türkiye, Kazakhstan, and Uzbekistan at the IFC, stated that SMEs form the base of the economy and play a key role in supply chains, local markets, exports, and digital transformation, while their growth provides benefits to suppliers, workers, customers, and local communities.

Kaestner said the right financial tools for SMEs are tied to employment and productivity, noting that the IFC's approach in Türkiye aims to support access to financing to enable SMEs to invest, grow, and create more jobs, which she said is possible through ensuring long-term financing via banks and connecting them with markets through larger firms and value chains.

She mentioned that investing in new equipment, transitioning to digital sales, and promoting investments in energy efficiency or preparing for exports also boost efficiency, helping small businesses grow into larger and stronger ones with more resilient jobs.

Kaestner emphasized that SMEs account for over two-thirds of employment in Türkiye but received less than 27% of total bank loans as of late 2025, highlighting a mismatch between SMEs' share of the economy and their access to financing, as Turkish small businesses continue to struggle to secure favorable maturity terms, viable collateral structures, and diverse financial products tailored to their operational needs.

She stated that the IFC is working with private banks, leasing firms, and private equity funds to develop longer-term financial products tailored to smaller businesses.

Kaestner said the IFC can mobilize private-sector financing, as reaching Turkish SMEs is most effective through financial institutions, thanks to their customer networks and capacity to develop solutions, while private equity funds can help with growth, job creation, and productivity in ways debt financing cannot.

She mentioned that the IFC provided a $350 million package for the recovery financing of small businesses in the disaster-stricken zone of the nation's southeast through five private banks, benefiting 55,000 MSMEs, including farmers, to support businesses in reinvesting, protecting their workforce, and contributing to the local economy.

Kaestner noted that while funding can be used for a wide range of purposes, financing is needed not only for daily working capital but also for efforts such as energy efficiency, digital transformation, building export capacity, and integration into supply chains to access new markets. She added that the IFC can support the flow of longer-term financing through private banks, leasing companies, and venture capital funds, which are not easily available in the market.

She stated that the next priorities in SME financing in Türkiye are mobilizing more private capital and diversifying financing channels by expanding long-term financing through banks, strengthening the role of non-bank institutions such as leasing and factoring companies, providing trade and supply chain financing, and making better use of capital market instruments.

She added that women's employment is one of the top items on the IFC's agenda, saying that women's participation in the workforce is 37% and that closing the gap could potentially drive a 25% increase in GDP, resulting in more investment, production, and employment.