World Bank’s Crises Response Helps Create and Protect Jobs in Türkiye

Key Highlights

• ​​Over 86,000 Turkish firms received $750 million in financial support through two World Bank-funded projects during the COVID-19 pandemic and the 2023 earthquakes. 
• ​The support helped create or preserve about 115,000 jobs, significantly benefiting youth (77 percent of new hires were under 30 years old) and female employment (61 percent of new hires were women) and allowed firms to grow faster than comparable firms in their sectors. 
• ​One year after receiving support, nearly 98 percent of MSEs and 97 percent of young firms were still operational, with over 83 percent having hired and retained new employees for at least 12 months. 
• ​The World Bank responded rapidly to the earthquakes that devastated southern Türkiye in February of 2023, approving a $450 million Post-Earthquake MSME Recovery Project that supported about 40,000 MSMEs received reimbursable financing, totaling approximately $449 million within two months. 

Challenge

Between 2020 and 2023, Türkiye’s MSMEs faced severe shocks from the COVID-19 pandemic and the catastrophic February 2023 earthquakes. Türkiye’s over 3 million MSMEs represent over 99 percent of registered enterprises in the country, and drive the economy through job creation, exports, and service provision. However, these businesses have limited access to traditional financial markets, exacerbating their vulnerability during crises. COVID-19 restrictions drastically reduced operations, while the earthquakes caused substantial damages, displacing millions and devastating businesses in the affected provinces.​

Approach

The World Bank adopted a strategic, multi-instrument approach to help Türkiye’s MSMEs respond to successive shocks—first responding to the COVID-19 pandemic through the Türkiye Rapid Support for Micro and Small Enterprises project, and later to devastating earthquakes in February 2023 (through the Türkiye Post-Earthquake Micro, Small and Medium Enterprises Recovery project). Recognizing the structural challenges MSMEs face in accessing finance, the World Bank partnered with KOSGEB, Türkiye’s Small and Medium Enterprises Development Organization on both projects, leveraging reimbursable financing mechanisms designed to swiftly address acute liquidity shortages while ensuring accountability through performance-based criteria. In parallel, the World Bank worked with two state-owned banks, Vakifbank and TKYB, to provide liquidity support to SMEs and underserved SME market segments (such as women-inclusive firms, young firms, and firms in less-developed regions) affected by the economic impact of COVID-19 (Türkiye Emergency Firm Support project). While Vakifbank lent directly to SMEs, TKYB carried out on-lending through participating banks and leasing companies.   The Emergency Firm Support project targeted SMEs that were severely affected by the crisis but remained financially viable. The two World Bank projects that responded to the COVID-19 pandemic were complementary, focusing on different segments of the MSME spectrum in terms of size and bankability.  

​KOSGEB utilized robust digital platforms to efficiently handle tens of thousands of applications and disbursements within weeks, showcasing a scalable model for crisis-response financing. The emphasis on digital implementation significantly reduced transaction times, increased transparency, and enabled rapid, accurate targeting of beneficiaries. In addition, the projects helped raise KOSGEB’s capacity and build a cadre of internal staff and consultants capable of implementing World Bank operations. 

​Beyond financing, the World Bank supported institutional capacity building at KOSGEB, strengthening a dedicated Project Implementation Unit (PIU) that effectively coordinated fiduciary management, environmental and social safeguards, monitoring and evaluation, and stakeholder engagement. This institutional strengthening attracted substantial parallel financing from international partners such as Japan’s International Cooperation Agency (JICA), thereby significantly increasing overall resources mobilized. The implementing entities under the Emergency Firm Support Project benefited particularly from training in environmental and social aspects of relevance to financial intermediaries. This flexible and responsive approach not only stabilized MSMEs during crises, but also laid a foundation for future resilience, employment generation, and sustainable growth over the medium- to long-term.

Results

World Bank-supported projects provided substantial and measurable relief to Türkiye’s private sector during two unprecedented crises, contributing significantly to employment preservation, private sector resilience, and inclusive economic recovery. 

From May 2021 to October 2022, the World Bank-funded Rapid Support Project disbursed $300 million to 46,400 micro and small enterprises (MSEs) severely impacted by COVID-19 lockdowns and liquidity crises. MSMEs represent 99.7 percent of Türkiye’s businesses and accounted for 70.6 percent of formal non-agricultural employment. The reimbursable financial support provided critical liquidity, enabling firms to survive, stabilize operations, and preserve employment. The project created or preserved 114,099 jobs, with crucial benefits for women and youth: 77 percent of newly hired employees were under age 30, significantly boosting youth employment, and 61 percent of newly hired employees were female. One year after receiving support, approximately 98 percent of beneficiary MSEs and 97 percent of young innovative firms were still operational. Additionally, more than 83 percent of firms hired new workers and retained them for at least 12 months post-financing, signaling sustained resilience and growth. 

The project also supported inclusivity, including across regions, by supporting women-led firms and young enterprises. Specifically, 62 percent of manufacturing firms and 78 percent of young innovative firms supported were female-owned. Geographic coverage was broad, with beneficiary firms spread across more than 80 cities in Türkiye, ensuring inclusive distribution of benefits. 

Following the catastrophic February 2023 earthquakes, the World Bank swiftly approved and launched the MSME Recovery Project. Speed was of the essence, and within two months (November–December 2023), the project, through KOSGEB, had disbursed nearly $449 million to nearly 40,000 MSMEs in earthquake-affected areas. More than three-quarters of recipients were concentrated in four provinces severely impacted by earthquakes: Kahramanmaraş (25.8 percent), Hatay (21.5 percent), Adıyaman (17.4 percent), and Malatya (11.7 percent). Around 92.6 percent were micro businesses, with 32.2 percent heavily damaged. 

The project particularly prioritized and supported female-owned enterprises, accounting for 13.5 percent (approximately 5,400 firms) of recipients. This targeted support facilitated rapid business recovery for women entrepreneurs, preserving their livelihoods and strengthening economic inclusion. 

The project strengthened KOSGEB’s institutional capabilities, building upon digital and administrative capacities developed earlier. This established model attracted parallel financing, specifically JPY20 billion (approximately $130 million) from JICA.  

From 2021, the Emergency Firm Support Project financially supported about 1,000 SMEs that were severely impacted by the COVID-19 pandemic, including around 700 financially underserved SMEs, such as firms in disadvantaged regions, women-inclusive firms, and young businesses. The project benefited more than 200 women-inclusive firms and about 350 MSMEs in the earthquake region. Firms supported through the project showed higher employment and value-added growth than firms on average in their respective sectors.  

Through these comprehensive, integrated responses, the World Bank significantly strengthened MSME resilience and preserved employment and business continuity in Türkiye. 

World Bank Group Contribution

The World Bank provided substantial financial ($1.250 million) and technical support through three projects:

• ​Rapid Support for Micro and Small Enterprises Project: $300 million reimbursable financing (International Bank for Reconstruction and Development - IBRD loan, fully disbursed), with technical assistance for institutional strengthening at KOSGEB.
• ​Post-Earthquake MSME Recovery Project: $450 million reimbursable financing (IBRD loan, fully disbursed), supplemented by technical assistance ($1 million) to strengthen KOSGEB’s Project Implementation Unit.
• ​Emergency Firm Support Project: $500 million credit lines (IBRD loans, fully disbursed) through Vakifbank and TKYB. ​

Partnerships

​​The projects attracted significant parallel financing from international development partners, including the Japan International Cooperation Agency (JICA), which provided parallel financing totaling $430 million, significantly increasing available funds for reimbursable financing support. JICA also provided further technical support in the context of the Post-Earthquake Recovery project, with targeted missions to the earthquake region by Japanese experts in earthquake response. The World Bank and JICA teams also joined forces in the monitoring and evaluation of both projects.​

Looking Ahead

The World Bank will continue to prioritize private sector resilience under Türkiye’s Country Partnership Framework (CPF) FY24–FY28, specifically aligning with CPF objectives on fostering inclusive and sustainable economic growth and strengthening resilience to shocks. Building on successful MSME support initiatives during COVID-19 and the February 2023 earthquakes, future operations will focus on enhancing MSME resilience through digital transformation, green financing solutions, and structural reforms. Continued efforts will leverage innovative financing mechanisms, digitalization, and targeted technical assistance to address MSMEs’ structural vulnerabilities, ensuring long-term business sustainability and improved crisis preparedness.​

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