
The DCED’s 7 Communities of Practice provide a safe space for continuous sharing of experience on key PSD themes among technical focal points in member agencies. This page covers the work of the Community of Practice on Market Creation for SME Finance.
The DCED is grounded in the reality that the private sector at large, and SMEs in particular, can thrive and drive positive change when embedded in appropriate support systems. This includes access to finance, business development services (BDS) and functional entrepreneurship ecosystems more broadly. However, it is widely recognised that SMEs in developing economies face significant challenges in accessing finance, particularly in the range of USD 50,000–100,000 up to USD 1–2 million.
This SME finance gap, often referred to as the ‘missing middle’, is not caused by a funding problem but by a collection of system failures that require a coordinated approach. These relate to the financial actors, their practices, instruments and business models; business services; and the regulatory frameworks needed to cost-effectively connect available pools of capital to SME demand. Addressing these systemic constraints in a coordinated fashion is called market creation or market building.
To address these challenges, the DCED established the Community of Practice (CoP) on Market Creation for SME Finance in 2025. The CoP aims to develop good practices for creating markets for SME finance and, in doing so, help address the missing middle. Members include bilateral agencies, foundations, development finance institutions (DFIs), international financial institutions (IFIs), and UN agencies. Together, members share lessons learned, support the development of guidelines and case studies, facilitate research, and foster collaboration and coordination among financial sector stakeholders, private sector development (PSD) practitioners, and finance professionals.
Conceptually, the Community brings together financial sector engagement and market systems development (MSD). Financial sector engagement is typically geared towards mobilising private finance for emerging and frontier markets, using concessional or blended finance instruments and guarantees to achieve development outcomes at acceptable returns. MSD market facilitation supports market actors (in finance, in BDS, or as part of value chains or the public sector) in developing more sustainable models, practices, and linkages with other actors to form more inclusive and adaptive systems. Together, they can build the ‘pumps and pipes’ through which finance can flow to SMEs.
The CoP on Market Creation for SME Finance is co-chaired by the Argidius Foundation and the FMO, the Dutch Entrepreneurial Development Bank.
In 2026/27, the CoP on Market Creation for SME Finance will focus on the following activities:
Publications of the Market Creation for SME Finance CoP are listed below.
For curated resources on the topic by other organisations, please refer to the DCED knowledge page for SME Finance (forthcoming):
Review the decisions, action items and discussion summaries of the Market Creation for SME Finance CoP below. This includes meeting minutes since its creation in 2025, as well as earlier DCED member exchanges on the topic.