339. Canada would like to thank the Secretariat for circulating the discussion paper under document , as well as Australia, Canada, Chile, the European Union, Japan, Singapore, Switzerland, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the United Kingdom, and the United States of America for co-sponsoring the paper. Canada is pleased to take this opportunity to present the discussion paper on the topic of "Intellectual property, innovation and microfinance". Following this, we will provide a few insights based on Canada's national experiences in the area of microfinance for innovation and look forward to an exchange of views from any interested WTO Member on this topic.
340. In recent discussions under this agenda item, the TRIPS Council has explored various topics related to IP-backed financing for innovative firms, including for micro, small and medium-sized enterprises (MSMEs). However, while conventional forms of financing through banks and venture capital may be more readily accessible to larger businesses, financing can nonetheless prove challenging for those MSMEs seeking to attract funding for innovation, such as in respect of financial literacy as well as the perception of risk by lenders. Access to microfinance, such as small-scale loans and microcredit may, however, provide an opportunity for smaller business to fund innovation, such as through IP-backed financing, whereby IP and related assets may be used as collateral for funding, in addition to social collateral in the form of pooled lending and joint liability.
341. The discussion paper for this agenda item, therefore, sets out to explore whether and how IP ownership or innovation might promote access to microfinance, as well as whether and how access to microfinance might promote innovation or otherwise support innovative or IP-based MSMEs. While a lack of financing can itself serve as an obstacle to innovation, other important questions arise as to whether intangible assets, such as IP, may be undervalued by creditors. For instance, challenges associated with the valuation and awareness of IP may serve as a limiting factor for innovative or IP-based MSMEs' access to "conventional" credit. As well, given the links between innovation and export performance, the issues of financial inclusion for innovative and/or IP-based MSMEs also has implications for international trade and trade finance, highlighting the importance of collaboration between the WTO and bodies such as the International Finance Corporation, particularly regarding the needs of innovation and/or IP-based MSMEs.
342. We therefore invite Members to share their perspectives on or experiences of financing or microfinance for MSMEs and would particularly like to hear from or about LDCs. For example, and we note here some of the issues put forward in document
a. What are some best practices or options in terms of IP-backed financing for MSMEs and/or other financing for innovative or IP-based MSMEs?
b. Which, and how can, innovations in finance, technological or otherwise, support innovative or IP-based MSMEs?
c. At what stage in an enterprise's development does IP-backed financing become an option?
d. What is the level of awareness of IP-backed financing among innovation and/or IP-based MSMEs? What are some best practices or options in enhancing this awareness?
e. How can IP rights be divided in ways that allow MSMEs to maintain some direct control and revenue generation from their IP while also leveraging IP for capital?
343. Now, in terms of Canada's experiences in this regard, we would like to highlight a few key projects through which Canada has supported microfinance for MSMEs in developing countries and LDCs, including with respect to innovation. For example, together with Développement international Desjardins, the microfinance arm of the Desjardins Group, a banking and financial services cooperative, Canada has long been working on projects to support microfinance networks in Mali, including the establishment of the Nyèsigiso network of savings and credit unions in the country. From 2008 to 2013, Canada's Microfinance Support Programme supported Mali's national microfinance strategy, which aims to improve access to diversified and innovative financial services for a large majority of poor and low-income populations. Through this project, Canada has supported the improvement of the performance of microfinance institutions, including through the development of automated computer systems and legacy assessments. In addition, our Agricultural and Rural Financing project in Mali, under way since 2014 and implemented by Développement international Desjardins and Financière agricole du Québec, aims to improve agricultural productivity in five regions by supporting management practices and farming methods, particularly through microfinance initiatives. These projects have also promoted innovations in microfinance, including the digitization of credit networks. For example, innovations such as inter-institutional systems and the introduction of service points have enabled credit union members to access loans across the country.
344. Canada has also supported the International Bank of Reconstruction and Development-World Bank's Women Entrepreneurship and Development Program, which was operational from 2013 until 2019, and provided access to finance and entrepreneurial training for women-led MSME owners in Ethiopia, including with respect to technology and product development. This project has notably contributed to the ability of microfinance institutions to appraise clients and reduce collateral requirements, including new forms of collateral such as business inventory to secure loans. The project also introduced innovative credit technologies to lenders, such as predictive analytics, to enable borrowers to seek loans without the need for high collateral requirements.
345. In presenting on these projects, Canada wishes to highlight the potential for both innovation in microfinance, by way of new technologies to reach and facilitate lending to MSMEs, as well as the role of microfinance in supporting innovative MSMEs develop new technologies and engage in innovative activities. While conventional IP-backed financing, such as bank or venture capital loans, may provide a more well-known vehicle for supporting innovation, innovative microfinance and innovation-supported microfinance may open new channels for fostering innovative activity, particularly for those small businesses that may not otherwise have access to credit in the knowledge-based economy. Canada looks forward to further exploration on this emerging topic, including any insights and national experiences from other Members during the present discussion.