WASHINGTON June 27, 2023—A new World Bank project will help avert the closure and maintain employment in viable micro, small and medium enterprises (MSMEs) affected by the economic shocks of the earthquakes that hit Southeastern Türkiye on February 6, 2023. The $450 million Türkiye Post-Earthquake Micro, Small and Medium Enterprises Recovery project’s objective is to support business continuity and sustainable growth of viable MSMEs in the 11 earthquake-affected provinces.
Under the guarantee of the Ministry of Treasury and Finance, the Small and Medium Enterprises Development Organization of Türkiye (KOSGEB) will implement the project with the aim to alleviate liquidity pressures on MSMEs and help them restore their operations and gradually restore employment to pre-earthquake levels by re-hiring workers or replacing those who have permanently left the affected regions.
“MSMEs have a significant contribution to the Turkish economy in terms of output, exports, and employment. Supporting the resilience of MSMEs to overcome the consequences of the earthquake will have positive spillover effects on the wider economy, through supply chains and supporting employment,” said Humberto Lopez, World Bank Country Director for Türkiye. “The Project will avert the closure of otherwise viable MSMEs due to damages to their productive assets because of the earthquakes, loss of workers, inputs, and generally lower demand. Consistent with this framework, the World Bank is pleased to contribute to the support of viable firms and protection of vulnerable jobs in Türkiye.”
The project will provide reimbursable financing to eligible MSMEs to cover their operating expenses. Performance-based reimbursable financing will be disbursed through one application round on a “first come, first served” basis within a one-year period or until the funds are fully disbursed, whichever comes first. To support more vulnerable groups, 10% of the total reimbursable financing funds will be earmarked for women-owned or led MSMEs.
“The earthquake-affected provinces are home to 473,354 private enterprises, 99% of which are MSMEs which are the main source of employment for poor and near-poor households and account for 346,000 jobs in an array of sectors,” said Stefka Slavova, Lead Economist at the World Bank and co-Task Team leader of the project.
“The project will support the relief and recovery in critical segments of the Turkish industries. The government is also expected to avoid bankruptcy-related costs in the short term and benefit from increased fiscal revenues in the medium term” added Ali Abukumail, Senior Private Sector Specialist at the World Bank and co-Task Team Leader of the Project.
The project is aligned with Türkiye’s Country Partnership Framework (CPF) for the FY18-23, which focuses on the three strategic areas of growth, inclusion, and sustainability.