We believe digital tools levels the playing field and allows MSMEs to create a digital, financial and business identity that can be used to expand their business and their client base.
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3 /4 -Third, we need to do more to align the unique capabilities and resources of different sectors to provide more integrated and holistic solutions to MSMEs that tackle barriers to growth in a more coordinated way, reducing duplication of effort and maximising precious resources. The global crisis has really helped to remind us that many different sectors share the same goal of helping MSMEs to thrive.
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The situation in Pakistan is very similar except that Agri sector has not been hit by lock downs. it has been exempted from many restrictions put in place
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4/4 - Fourth, we need to continue to invest in building out a supportive operating environment and infrastructure for MSMEs with a big focus on enabling participation in the digital economy. We have seen digitisation really come into its own during the crisis - ensuring MSMEs can continue to make and receive payments, access finance, information, advice and support. We have to continue to invest in developing these systems.
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Hi Eduardo. Good to see you here! I appreciate the model of addressing smallholder value chains, by ensuring that diverse partners are brought together and helped to orchestrate their work. Wish you a lot of success!
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Agree 100% that is why we need to solution digitally the challenges that MSME face. And that is only through collaboration and co-creation. Partnership approach like the one you mentioned is the way to help the ecosystem become more sustainable and resilient.
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I think we all agree that intervening now with financial support will help MSMEs continue to function. However, to ensure we support longer-term resilience, this support with liquidity can be conditional – for example, we can support MSMEs by providing short-term financial assistance under the conditions that MSMEs adopt more resilient practices, such as climate smart practices, diversification of supply chains or output markets, etc.
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Jorge - have you seen any data that shows increased adoption of digital payments among MSMEs since the start of the crisis?
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Hi! I’m Pam Cornes, Social Impact Director at AB InBev based in New York. Excited to be part of this conversation to share opportunities and insights for supporting and working in partnership with MSMEs to grow and thrive! Thank you Business Fights Poverty for hosting!
A great opportunity is building on and scaling the good practices and programs that were quickly developed in recent months; learning and sharing across sectors and countries. With the challenges facing small retailers, our team in Ecuador polled nearly 20,000 shop owners and learned there were two ways we could help: ensure the safe supply of groceries and basic necessities to the shops, and offer an easy way for shops to fulfill and deliver online orders.
As a result, we developed Tienda Cerca, an online delivery platform that is enabling small neighborhood grocers and shops to stay open and serve their customers. It has been scaled across multiple markets, now operating in Ecuador, Colombia, Peru, Mexico, El Salvador, Dominican Republic, Panama and Honduras. More than 70,000 stores have registered in Ecuador and over 20,000 in Mexico.
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To your point on data scarcity, National governments and other large actors have experienced challenges collecting data on the MSME sector due to informality, which is structurally intentional as incentives to formalize are not there. Due to COVID, there is a lot of data collection happening with surveys and calls for innovation from governments e.g. ICT COVID Advisory taskforce set up by the Kenyan government. This data should be used post-COVID to guide policy for a distinct MSME sector (in some cases, the terms startup/SME/MSME/Innovators have been used interchangeably in policy decision making)
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Another long-term enabling factor is proper regulation. Some examples related to government and payments, which is our space, that can enable the right conditions:
- During the current crisis, a number of governments have increased their limits on contactless payments in Kenya, Tanzania and Uganda
- Government Subsidies distributed in digital form, enablement of point of sale terminals to allow beneficiaries access to help in a secure and convenience form. Guatemala and Dominican republic
- Tax breaks to consumers and businesses as an incentive to use digital payments and eventually increase tax revenue. South Korea
- Using Government Payments as a Driver to Digital Payment Acceptance Albania and Niger
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Absolutely agree @schetail! We need to tag financial capital with other return criteria than simply financial returns. Now is the opportunity!
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Agree @Favad. Government has a strong role to play as do investors. How can we use the digital leap now to leapfrog even further to new systems solutions? For example, moving to more localized food supply chains around cities, with benefits for consumers and farmers, for nutriton and environment. Small farms operating digitally can enable these linkages, and startups are already working on intermediation platforms in this and other domains.
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Our segmented data is illustrating that there are very few high impact truly entrepreneurial ventures. I agree that these need to be identified and supported for further growth with innovative funding mechanisms, better access to markets and training and development for crucial business support functions to enable the next stage of growth for fledgling businesses.
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Absolutely agree! That was what I meant – we are now seeing lots of surveying (too much sometimes) which would be grand to use going forward. Did you see the initiative by the Center for Financial Inclusion with Mastercard?
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Hi Lino, we have made a lot of progress since we last spoke and found that the key is structuring financing and service vehicles in which all key actors are co-owners. Complex but we are excited about the potential to achieve scale. Particular momentum now in Brazil and other Latin countries but looking to expand this elsewhere
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The ecosystem support has to be put in place. Govt and investors and startups will have to work together and agree to this new form of supply chains. I am sure the large stores which just want to reduce their prices will not encourage localized food production
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Fully agree that building trust is the first absolutely necessary step for any model to work. This however takes time (years…) and can be easily affected by unexpected events (such as COVID-19). Also our commitments need therefore to be long-term to ensure resilient value chains.
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another example comes from Jordan where the government of Jordan’s relaxation of regulations to allow quicker and easier opening of digital wallets has significantly increased access to digital wallets in the country - a trend to watch carefully to ensure we unlock this potential!
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Looks like a terrific initiative, especially because it achieves scale. Congratulations. Are you able to link this to improved financing?