The United Nations Capital Development Fund (UNCDF) has announced the launch of an innovative Credit Guarantee Facility designed to support livelihoods and build economic resilience, following the devastating earthquake, in March 2025. The facility will work in communities facing fragile conditions to strengthen resilience.

The initiative marks a significant step in derisking critical investment to micro, small, and medium enterprises (MSMEs), during a period of crisis and ongoing socio-economic vulnerability.

UNCDF partners with a local financial institution, the Myanma Apex Bank (MAB), to be the guaranteed party. Under this portfolio guarantee, MAB will extend credit to eligible Microfinance Institutions (MFIs), which in turn will provide short-cycle microloans to small businesses in the quake-hit regions for working capital and income-generating activities.

While the initial investment of an equivalent of US$800,000 in local currency Myanmar Kyat (MMK) came in part from the UNCDF trust fund, the program is designed to maximize impact through a recycling model. Over a duration of 2.5 years, the capital will move through two deployment cycles, effectively leveraging the funds to reach an estimated USD 3.2 million in total financing for micro and small businesses.

The pilot program will operate in a vital segment of the development sector, providing a bridge to financing in an environment where foreign currency transactions are hard to come by, and many traditional finance institutions are unable to operate. By lowering collateral requirements for banks, the program unlocks much-needed financing for MFIs that serve as the primary lenders to local entrepreneurs.

"Even in the most fragile contexts, a small amount of patient capital can open a massive space for recovery," said Ms. Maria Perdomo, Regional Investment Team Lead for UNCDF, in Asia and the Pacific. “This initiative is about supporting people to restore their livelihoods and build resilience in the face of ongoing challenges. By providing this guarantee, we are derisking local financial institutions so loans and opportunities can be unlocked. We are creating a way to build hope and resilience for women and small businesses when and where they most need it."

The initiative will play a vital role in de-risking loans to microentrepreneurs who are supported by the United Nations Development Programme. UNDP is fostering a resilient and inclusive economy in Myanmar by supporting the recovery of more than 500 small and medium enterprises that were affected by the earthquake, as well as providing free business education through the e-learning portal for more than 16,000 MSMEs.

A key pillar of the facility is its commitment to gender-inclusive recovery. Of the estimated 6,000 micro-entrepreneurs expected to benefit directly from the program, 80 percent are women. By targeting sectors such as agriculture, informal retail businesses, and household enterprises, the initiative supports the very backbone of the local economy, ultimately benefiting approximately 30,000 individuals across fragile regions.

U Zaw Moe Aung, Deputy Chief Executive Officer, said he is pleased to partner with UNCDF. "At Myanma Apex Bank, we have deep experience in lending to micro finance companies operating nationwide. We believe in the power of local enterprises to drive economic recovery. This credit guarantee facility with UNCDF allows us to unlock important financing for micro-entrepreneurs who are critical to our nation’s local economies. We are confident that this initiative will accelerate recovery and empower a new generation of business owners."

This pilot program represents more than just a financial transaction; it signals UNCDF’s commitment to supporting communities in sustaining livelihoods and building economic resilience in Myanmar.

By deploying catalytic concessional first-loss capital in fragile contexts, UNCDF changes the risk profile of investments in last mile and early-stage markets and creates pathways for inclusive recovery and growth.