ASSET MANAGEMENT MOVES INTO THE SPOTLIGHT

Going forward, the majority of governments are forecasted to remain in the borrowing position in the years leading up to 2018. Despite this projection, there has been a visible trend towards reducing the position of net borrowers (since 2009), which is forecasted to continue by the International Monetary Fund. This means governments will have to either reduce their expenditures, increase their revenues, or a com- bination of both. Since fiscal pressures in European countries (particularly Italy, France, Spain and Belgium) are perceived as too great, many have already tried cutting their expendi- tures. As governments tighten their belts and restrict public spending, they are increasingly looking for ways to marshal private capital. As traditional sources of money have evaporated, financing gaps have emerged in some parts of the economy, especially for SMEs and infrastructure projects where the demand for financing is growing. The credit gap for formal SMEs has increased froman estimated $1.3 - $1.6 trillion in 2010 to $1.5 - $1.8 trillion in 2011. 7 Additionally, the annual infrastructure financing gap is $2 trillion globally. 8 dEmand for financing is growing

Figure 3 formAL ANd INformAL msmes CredIt gAp ($ tN)

Developing countries

OECD countries

Informal MSMEs

thE crEdit gap for formal smEs is around $1.5 trillion globally

Formal SMEs

There are between 420-510 million informal and formal Micro, Small and Medium Enterprises (MSMEs) in the world. Of these, 15-19% are formal microenterprises and 70-80% are informal MSMEs and non-employer firms. In 2011, the gap in credit financing of formal microenterprises was $0.5-0.6 trillion globally - the majority attributed to developing economies ($0.4 - 0.5 trillion). The credit gap for formal SMEs was estimated at $1.5 - $1.8 trillion (see figure 3).

Formal microentreprises

0

1

2

3

4

Source: PwC ananlysis based on IFC Enterprise Finance Gap Database (2011)

Sources: IFCEnterpriseFinanceGapDatabase (2011)

7 IFC Enterprise Finance Gap Database, 2011 8 World Economic Forum,“Paving the Way: Maximizing the Value of Private Finance in Infrastructure,”2010

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