The economic crisis brought about by the COVID-19 pandemic is disproportionally impacting small businesses and low-income households. While there is emerging evidence about how individuals and MSMEs have been impacted by COVID-19, the impact on the providers that serve these customer segments is less clear, particularly when tech-enabled providers play an important role in mitigating the economic impacts of the pandemic for households and businesses by <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/PFFIEA.pdf" target="_blank" rel="noopener noreferrer">deploying services quickly and efficiently</a>. Additionally, fintechs are well-suited to <a href="https://www.consultancy.eu/news/4523/covid-19-crisis-also-an-opportunity-for-fintechs-says-bcg" target="_blank" rel="noopener noreferrer">bounce back</a> and reorient themselves in times of crisis given their <a href="https://www2.deloitte.com/us/en/pages/financial-services/articles/beyond-covid-19-new-opportunities-for-fintech-companies.html" target="_blank" rel="noopener noreferrer">agile nature</a>. However, in order to determine how best to support fintechs, more information is needed to understand how these providers have adapted to a challenging economic landscape.

To understand more about the impact on and the role of these providers, CFI, in partnership with the <a href="https://scbf.ch/" target="_blank" rel="noopener noreferrer">Swiss Capacity Building Facility</a>, conducted research to understand fintechs’ early adaptation and coping models under COVID-19. This brief draws findings from the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> applicant data coupled with key informant interviews with investors and fintechs conducted in March 2020. During June and July 2020, 403 early-stage fintechs (Figures 1 and 2) applied through a publicly available online form that gathered data related to target market, financials, product details, as well as seven COVID-19-specific questions exploring changes in fintechs’ business and operating models between December 2019 and May 2020. The findings also include COVID-19 survey findings from six 2019 Inclusive Fintech 50 winners.
<h4>Inclusive Fintech 50 Sample Distribution
Figure 1. Inclusive Fintech 50 Distribution by Product Category</h4>
<img class="alignnone size-large wp-image-40001" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/Table-1-v3-1024x627.png" alt="" width="1024" height="627" />
<h6>N = 409
Note: Infrastructure includes a fintech whose main business is to provide processes and tools that enable multiple types of financial services such as credit, payments, insurance, and personal wealth management.</h6>
<h4>Figure 2. Inclusive Fintech 50 Distribution by Fintech’s Operating Country</h4>
<img class="alignnone size-large wp-image-40002" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/Table-2-v3-1024x671.png" alt="" width="1024" height="671" />

The findings show these early-stage fintechs innovated rapidly to meet the changing needs of their customer base, while simultaneously reconfiguring operating models, internal policies, and growth strategies. Importantly, the findings present clear opportunities for investors to play a central role in expanding financial services to the underserved through these critical providers.<strong> </strong>

Findings from our research reflect five key takeaways:
<ol>
 	<li><strong>Fintechs are operationally resilient.</strong> Fintechs are maintaining a cash buffer and employing diverse strategies to keep their staff on board.</li>
 	<li><strong>New partnerships.</strong> The pandemic is enabling early-stage fintechs to increase their business opportunities by creating new partnerships with banks, government, and non-governmental organizations (NGOs) that need to digitize their services.</li>
 	<li><strong>New approaches to customer acquisition.</strong> Early-stage fintechs are employing digital delivery channels like platforms to increase uptake.</li>
 	<li><strong>New products and product changes.</strong> Early-stage fintechs are pivoting products to meet client needs. Payments and — surprisingly — savings and financial management fintechs grew their services between December 2019 and May 2020.</li>
 	<li><strong>New funding sources:</strong> Almost all of the fintechs have had to change their fundraising strategies in light of COVID-19, mainly diversifying their funding base.</li>
</ol>
While fintechs have shown resilience by innovating and evolving their offerings in the wake of the COVID-19 crisis, their biggest need remains access to capital in order to continue innovating.

Rapid Innovation: How Fintechs are Adapting Under COVID-19

<a href="https://www.cdcgroup.com/en/" target="_blank" rel="noopener noreferrer">CDC Group</a>, the UK’s development finance institution, is one of the largest DFIs in the world. With nearly $6 billion invested in companies located mostly in Africa and South Asia, CDC is an impact investor that aims to drive development through commercial means.

CDC invests across a wide range of sectors but focuses on seven priority sectors that it has identified as having the greatest potential for development impact. Among these, the financial services sector currently represents a <a href="https://www.cdcgroup.com/our-impact/key-data#how-we-invest-in-sectors!" target="_blank" rel="noopener noreferrer">greater share of CDC’s portfolio</a> than any other sector.

As part of its exploration into how DFIs are responding to COVID-19, in particular with respect to the role of the financial sector, CFI connected with Machal Karim, an executive on CDC’s Development Impact team who focuses on financial services in developing countries.
<h2>For its COVID-19 response, CDC has laid out three areas of focus: ‘Preserve,’ ‘Strengthen’ and ‘Rebuild.’ Can you tell us more about those?</h2>
We prepared a briefing document with complete details that is available on our <a href="https://www.cdcgroup.com/en/covid-19-response/" target="_blank" rel="noopener noreferrer">COVID-19 response page</a>.
<blockquote>Our immediate priority has been to preserve the viability of our current portfolio of over 1,200 businesses that employ more than 800,000 people combined.</blockquote>
Our immediate priority has been to preserve the viability of our current portfolio of over 1,200 businesses that employ more than 800,000 people combined. This is particularly the case in those sectors most affected by COVID-19, where it’s been crucial to act to protect the positive environmental, economic, and social impact of these businesses. Our support has included providing working capital, technical assistance, and guidance to improve their resilience and protect jobs.

Our second area of focus is to strengthen the resilience of businesses by scaling up our response to the economic and health challenges of the crisis. On the economic side, we’re channeling much-needed liquidity to local banks to enable them to support their business customers. And to support those that have a direct role in combating the COVID-19 pandemic, we are assessing opportunities to invest in businesses providing healthcare or access to basic goods and services.

We’re now at a point where, alongside these more immediate actions, we’re thinking more about our third area of focus – to support economies to rebuild and recover once the worst effects of the pandemic have passed. As a DFI, our role to address the long-term challenges a crisis will bring – continuing to invest patient capital at a time when commercial investors pull back – is vital.
<h2>In terms of ‘Strengthen,’ CDC is looking to provide liquidity for local financial service providers. Have you identified opportunities for this type of support yet?</h2>
We’re giving priority to those who are in most urgent need of liquidity support. Over the last few months, we’ve committed just over $400 million to our program of systemic liquidity.

As an example, we’ve recently made an <a href="https://www.cdcgroup.com/en/news-insight/news/cdc-announces-additional-us75-million-trade-finance-deal-with-absa-as-part-of-covid-19-response/" target="_blank" rel="noopener noreferrer">additional $75 million commitment</a> to our existing trade finance facility with Absa Bank, an African financial services group. The pandemic has put significant pressure on African banks as international banks continue to withdraw from the continent.
<blockquote>What makes this facility particularly innovative is that it is aimed at boosting trade finance funding to some of Africa’s most vulnerable countries.</blockquote>
The investment will enable local banks to sustain the availability of trade finance, supporting supply chains during the crisis. And what makes this facility particularly innovative is that it is aimed at boosting trade finance funding to some of Africa’s most vulnerable countries and in sectors that are critical to serving people’s basic needs during the crisis – food and agriculture and health.
<h2>What about timeframes? What do you see as the medium-term needs beyond liquidity?</h2>
<blockquote>What we do know is that the crisis is shifting from an acute challenge to a chronic one, and this means that our role will be as a partner for the long-term.</blockquote>
CDC has identified various <a href="https://www.cdcgroup.com/en/news-insight/news/guidance-on-protecting-customers-during-covid-19/" target="_blank" rel="noopener noreferrer">short-term to longer-term risks and provided corresponding suggestions</a>, but we’re at a stage where it’s still very difficult to talk about timeframes. We still cannot predict what the ultimate impact will be. What we do know is that the crisis is shifting from an acute challenge to a chronic one, and this means that our role will be as a partner for the long-term, supporting businesses through the course of the pandemic and to rebuild sustainably.

In terms of needs beyond liquidity, our approach throughout has been to provide guidance for employers, investors, and financial institutions on issues ranging from <a href="https://www.cdcgroup.com/en/news-insight/insight/articles/how-can-investors-help-companies-protect-jobs-during-covid-19/?fl=true" target="_blank" rel="noopener noreferrer">job protection</a>, to <a href="https://www.cdcgroup.com/wp-content/uploads/2020/04/CDC-Group-Guidance-on-protecting-customers.pdf" target="_blank" rel="noopener noreferrer">customer protection</a>, to <a href="https://www.cdcgroup.com/en/news-insight/insight/articles/guidance-on-managing-a-remote-workforce-during-the-covid-19-pandemic/?fl=true" target="_blank" rel="noopener noreferrer">remote working</a>. As time has moved on, the nature of this guidance has evolved to include advice on <a href="https://www.cdcgroup.com/en/news-insight/insight/articles/returning-to-the-workplace-during-covid-19-labour-and-workforce-considerations/" target="_blank" rel="noopener noreferrer">returning to the workplace</a> and how to support women working from home with limited access to technology.

Another part of our approach has been to provide support to investee businesses through <a href="https://www.cdcgroup.com/en/covid-19-response-facilities/" target="_blank" rel="noopener noreferrer">our technical assistance facility, CDC Plus</a>. This has included one facility providing grants to businesses, so they can adapt or scale-up to form part of the response to the pandemic, and a second facility to support the development of guidance for companies on how to respond to the crisis.
<h2>Throughout the short and medium terms, CDC suggests businesses maximize their “digital footprint and channels” as much as possible. How are your investees working to accelerate digitization for consumers?</h2>
We’ve been supporting our investee businesses, including financial institutions, to proactively explore how they may want to pivot their current products or operations to better meet customer needs. Much of this has revolved around learning more about digital opportunities and maximizing their digital offerings so they can continue to operate under the changing environments and new types of customer interaction and behavior that the pandemic has brought about.

We continue to support our investees through various channels, including our technical assistance facility, to explore these opportunities and step up their activities as economies open up.
<h2>Consumer protection remains an important topic for CDC. How have consumer protection challenges shifted in the COVID era?</h2>
<blockquote>Consumer protection risks have become particularly heightened due to the pandemic.</blockquote>
We recognized that financial institutions and their customers would come under particular stress as a result of COVID-19. Consumer protection risks have become particularly heightened due to the pandemic, as financial institutions have had to balance the immediate stress on liquidity with the need to sustain support to their customers and abide by regulatory requirements.

Early on, we ensured that the financial institutions we’re invested in had the support they needed to make decisions and manage risks while protecting customers, such as by issuing this <a href="https://assets.cdcgroup.com/wp-content/uploads/2020/04/09165635/CDC-Group-Guidance-on-protecting-customers_9-April-2020.pdf" target="_blank" rel="noopener noreferrer">guidance document</a>. Mindful of the many stresses on employment, liquidity and cashflows, we urged our financial institution partners to continue to consider the needs of, and risks to, customers through the crisis.
<h2>How has this crisis shifted the perception of inclusive finance, if at all?</h2>
<blockquote>Now more than ever, support to financial systems is critical for economic recovery, particularly for the most vulnerable.</blockquote>
Now more than ever, support to financial systems is critical for economic recovery, particularly for the most vulnerable. Our work to provide systemic liquidity has been a concrete channel of support to the market, with an explicit focus on supporting the most vulnerable first and ensuring their liquidity needs are managed.

When we start to recover, it will be vital to remember all segments of the market to ensure that the most vulnerable and excluded groups are not left behind. It will also be important to continue to support financial institutions in reaching those customers that have historically been perceived as higher risk and harder to reach, as they are also the most vulnerable.
<h2>CDC’s head of Africa has argued that the banking sector is where DFI support is most crucial, but that private capital will be required in the longer term. Does CDC structure any direct support to MSMEs or does everything flow via the banking sector?</h2>
<blockquote>We know that our most effective way for getting capital to SMEs is through partners, rather than investing directly.</blockquote>
A key part of our <a href="https://www.cdcgroup.com/wp-content/uploads/2020/05/Financial-Institutions_11.pdf" target="_blank" rel="noopener noreferrer">Financial Institutions' Strategy</a> is to help intermediaries serve SMEs because SMEs are the growth engines of the economy in our geographies. We know that our most effective way of getting capital to this size of business is through partners, rather than investing directly.

This includes investing in non-bank financial companies so that alternatives to traditional bank financing become available to SMEs, as well as supporting microfinance institutions looking to extend their lending to SMEs. It also includes working with our bank investees to increase the finance they provide to SMEs. This can mean funding work to develop products and operations better suited to SME clients. And it can mean entering into risk-sharing agreements, which reduce banks’ capital cost of lending to SMEs, or trade finance agreements to bridge the ‘trade finance gap’ and support trade undertaken by local businesses. Finally, it includes investing through funds to reach SMEs with different types of capital.

That’s why an important part of our response has been focused on working with our investee financial institutions, so that we can quickly help them to increase the credit available in our markets. For example, by expanding our pre-existing trade finance programs, we can inject liquidity quickly and accurately, and ensure that domestic supply chains keep operating, which in turn supports SMEs within those markets.
<h2>Has CDC coordinated with other DFIs on its COVID-19 response? What’s been the nature of this inter-DFI coordination, and what more can be done?</h2>
DFIs came together very early on to find ways to collaborate in response to the pandemic. The <a href="https://www.cdcgroup.com/en/news-insight/news/development-finance-institutions-join-forces-to-respond-to-covid-19-in-developing-countries/" target="_blank" rel="noopener noreferrer">DFI Alliance</a>, involving organizations from 16 OECD countries, has been working together to bring liquidity to the market, support companies impacted by the virus, and promote new investment.

CDC has been working with both bilateral and multilateral DFIs. There are various working groups underway coordinating on areas ranging from technical assistance funding, to our approach to certain sectors, to supporting the liquidity of investment funds.

We’ve also been collaborating on how to support the rebuilding of businesses and economies in a way that is more inclusive. For example, alongside our peers, we <a href="https://www.cdcgroup.com/en/news-insight/news/2x-challenge-and-gender-finance-collaborative-response-to-the-covid-19-pandemic/" target="_blank" rel="noopener noreferrer">called for a gender-sensitive approach</a> among investors in both immediate responses and longer-term recovery solutions.
<blockquote>We will continue to stand firm to play our role at a time when commercial investors are pulling back.</blockquote>
We feel proud of what we’ve been able to achieve so far and recognize there is a lot more to do as the pandemic shifts from an acute to a chronic challenge. Our approach of providing much-needed liquidity through financial intermediaries is very likely to continue to be needed in the coming years. We will continue to stand firm to play our role at a time when commercial investors are pulling back, so that in the long-term, businesses and economies are able to successfully rebuild.

DFIs, Financial Inclusion and the COVID-19 Response: A Q&A with Machal Karim of CDC

Many have compared the steps required to overcome COVID-19 with those taken in previous economic crises or <a href="https://centerforfinancialinclusion.org/pandemics-and-natural-disasters-what-can-we-learn-from-past-disasters-to-help-with-todays-pandemic/" target="_blank" rel="noopener noreferrer">natural disasters</a>, whereby the situation follows a similar pattern consisting of three stages: triage, stabilize, recover. While there is some applicability to the current COVID-19 pandemic, it implies a sequence and limited duration that may not truly characterize the nature of the challenges we now face. The reality is that COVID-19 is a more persistent phenomenon that may continue to ebb and flow for some time before it is fully under control.

Given the more entrenched and global nature of this crisis, it is likely that the consequences will be more varied and run deeper than what we have seen in past crises. To help get a sense of what these consequences may be for those who are most vulnerable, we asked a few members of CFI’s <a href="https://www.centerforfinancialinclusion.org/people/advisory-council" target="_blank" rel="noopener noreferrer">Advisory Council</a> to share some brief thoughts on what they see as the biggest implications of COVID-19 and the ways in which the inclusive finance sector can address them.
<h2>Camilla Nestor, Adjunct Professor at Columbia University</h2>
From my perspective, one of the biggest implications of COVID-19 is on food security for countries and populations that were already vulnerable. Before COVID-19, the world’s estimated 500 million smallholder farmers were one of the most financially underserved segments, with an estimated <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">$100 billion lending gap</a> in Africa alone.

As a result of COVID-19, smallholder farmers are dealing with significant volatility in demand for both cash crops and food crops, challenges securing the necessary inputs, and limits on accessing markets. On top of this, they are also facing reductions in access to already-scarce capital. If unaddressed, this lack of capital will directly impact their ability to produce food. We see that commercial lenders are pulling back on lending to agriculture; <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_Summary_FINAL.pdf" target="_blank" rel="noopener noreferrer">cross-border social lending</a> is flat; and supply chain financing is at risk – for example, in a recent <a href="https://www.afap-partnership.org/covid-19-impact-assessment-on-the-agrismes-and-farming-communities-of-ghana-malawi-mozambique-tanzania-and-uganda/" target="_blank" rel="noopener noreferrer">survey</a> of 5 markets in Africa, farmers noted reduced access to both supplier credit and trade credit since the onset of the pandemic.
<blockquote>With smallholder farming contributing up to 80% of the food supplies in some regions, there is significant risk to food security at both a household level and a national level.</blockquote>
With smallholder farming contributing <a href="https://www.ifad.org/documents/38714170/40706188/Smallholders+can+feed+the+world_e.pdf/460ca6c2-7621-40d8-9f79-a56f6f8fa75e" target="_blank" rel="noopener noreferrer">up to 80%</a> of the food supplies in some regions, there is significant risk to food security at both a household level and a national level. This is an opportunity for the financial inclusion community and agricultural finance experts to come together to develop short-term and longer-term mechanisms to ensure that financing flows to this critical segment.
<h2>Mark Pickens, Senior Director of Social Impact at Visa</h2>
We need to step up for small and micro businesses as they are the backbone of the global economy. Unless they remain resilient and grow, most economies are going to suffer because small businesses typically account for half of all jobs and GDP. The challenge is even greater with women-owned small businesses, which face many challenges, including lack of access to capital.
<blockquote>Key factors to building resiliency will include how small and micro businesses digitize payments, access other financial services, and skill-up to operate in an increasingly digital economy.</blockquote>
Key factors to building resiliency will include how small and micro businesses digitize payments, access other financial services, and skill-up to operate in an increasingly digital economy. Earlier this year the Visa Foundation announced $210 million to help small businesses. Visa also launched online toolkits via Small Business Hubs in 20 countries, expanded our Practical Business Skills portal for a greater geographic reach, and committed to digitally enable 50 million small businesses as we collectively recover from the COVID-19 pandemic.
<h2>Joanna Ledgerwood, Independent Consultant</h2>
It has been well-documented that the COVID-19 crisis has disproportionately affected women and girls. In most countries, social norms dictate that women bear primary responsibility for feeding and caring for their families and managing the household. With children not able to attend school and sick family members needing care, women have increased responsibilities, exacerbating an already heavy workload. The result is women have less time for paid work, and because of the pandemic, less access to informal financial services such as savings groups or local shop credit to help them through.
<blockquote>This pandemic provides an opportunity to proactively promote women’s empowerment.</blockquote>
However, this pandemic provides an opportunity to proactively promote women’s empowerment and advance household food security. Understanding how women and men are impacted differently by the pandemic, as well as the risks, constraints and hardships women face and their specific needs, requires the collection and analysis of sex-disaggregated data. This data can help to design appropriate programs and policies and inform financial products and delivery channels to effectively reach women.

For example, providing digital cash transfers directly to women increases their chances of receiving and controlling money to meet household needs, which in turn is likely to lead to greater bargaining power at home. The use of sex-disaggregated data can help to design programs that mitigate unintended consequences of cash transfers such as increased domestic violence. In addition, G2P programs that take gender biases into account can enhance women’s resilience to future economic shocks and can influence change to social norms over the long-term. Now is the time to ensure that women’s increased responsibilities and reduced ability to earn income will not further widen the gender gap in financial inclusion that existed long before this pandemic.
<h2>David Ferrand, Independent Consultant</h2>
Much depends, I think, on factors beyond financial inclusion. The indications remain rather positive that the health impact on Africa will be relatively bearable, notwithstanding the tragic loss of life. But we still don’t know yet the eventual economic cost to Africa, either in absolute terms or in how it will be distributed. There is a very real concern that the recovery from the crisis could see the micro and smaller scale business sectors re-emerging significantly disadvantaged relative to larger scale. And many people who have lost their livelihoods in the crisis may end up in long-term poverty traps.
<blockquote>Only governments have the balance sheets necessary to bear the risks involved.</blockquote>
There are financial sector providers positioned to play a pivotal role in restoring liquidity to communities and investing in rebuilding. But it would be unrealistic to expect that financial sector players can do this alone. There needs to be a new partnership between the financial sector, communities, and governments. Only governments have the balance sheets necessary to bear the risks involved – but they need help from across the financial system in providing the support where it is needed.

Over the longer term, there is also a need for genuine innovation in developing solutions to deal with the human and economic losses. Digital transformation has extraordinary potential, both now and in the future, to change our societies and ultimately lead to ever greater economic, social and cultural integration of countries and the world. The best-case scenario is that the COVID-19 crisis could lead to our harnessing digital finance to empower the rebuilding and development of local communities. But this is going to require bold, swift and pragmatic action.

Implications of COVID-19 for the Most Vulnerable: A Snapshot of Views from CFI’s Advisory Council

Micro, small, and medium enterprises (MSMEs) in Indonesia are suffering in the wake of COVID-19 according to data collected by CFI. Seventeen percent of the businesses in the sample have closed, and 85 percent of those that continue to operate estimate their profits have decreased, often by 50 percent or more.

Owners of the MSMEs that were operating at the time of the survey remained optimistic despite the economic downturn. Almost two-thirds reported they were covering their business expenses with revenue and thought they could keep their doors open for another three months based on how things were going. In addition to altering their business practices to stay open, the data on owners’ use of financial tools suggests that they are drawing down their financial resources, raising concerns that they have little cushion for the months ahead.

From July 13 to August 8, 2020, CFI conducted phone interviews with a random sample of <a href="https://bina-artha.com/" target="_blank" rel="noopener noreferrer">Bina Artha Ventura (BAV)</a> clients in Indonesia. BAV, which is <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">participating in Accion’s partnership with Mastercard</a>, is a microfinance institution that uses a group lending methodology to serve entrepreneurs, mostly women, who predominantly live in rural areas. CFI completed 730 interviews, 660 of which were with female MSME owners. Two-thirds of the owners ran sole proprietorships while 31 percent ran microenterprises (one to 10 employees). Those microbusinesses employed an average of three people before the pandemic. MSMEs in the sample have been operating for almost eight years on average. Most businesses were grocery or food stands, although farming and the sale of household goods were also common. This is one of six surveys CFI is conducting in Indonesia as part of its <a href="https://www.centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact" target="_blank" rel="noopener noreferrer">ongoing effort to study the impact of COVID-19 on the financial health of MSMEs</a>. As with data from CFI’s first survey in Nigeria, the data from this survey is <a href="https://www.centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/indonesia" target="_blank" rel="noopener noreferrer">presented in this interactive dashboard</a>.
<h2>Survey Insights</h2>
<h4>Nearly one in five women-led businesses have closed. They were almost twice as likely to close as male-led businesses.</h4>
<blockquote>Of the women-led microbusinesses that closed, 78 percent said they were completely confident that they would reopen in the future, but only 57 percent of the women-led sole proprietorships that closed said the same.</blockquote>
Since COVID-19 struck Indonesia, 18 percent of women-led businesses in the sample have closed. These closures have proportionally impacted businesses of different types and sizes, and they have been driven largely by a drop in customer demand, likely the result of restrictions on movement being enforced in the country. The owners of these businesses were generally confident that they would be able to restart their business in the future, but there were major differences based on how large the businesses were prior to the pandemic. Of the women-led microbusinesses that closed, 78 percent said they were completely confident that they would reopen in the future, but only 57 percent of the women-led sole proprietorships that closed said the same. Importantly, women-led businesses were almost twice as likely to close as male-led businesses. Of the 70 male-led businesses in the sample, only 10 percent had shuttered their operations.
<h4>COVID-19 has led to dramatic declines in profits, but roughly two-thirds of businesses say they are covering their expenses.</h4>
<blockquote>70 percent of operating businesses reported a decrease in profits of 50 percent or more.</blockquote>
Businesses generally did well in the year before the pandemic struck. Fifty-six percent of respondents reported their profits increased compared to the year before while 38 percent said they had stayed the same. Only 5 percent of people said their profits had declined, but that number has skyrocketed since COVID-19: 85 percent of businesses reported that their profits have declined compared to pre-pandemic levels. Those declines have been dramatic, with 70 percent of operating businesses reporting a decrease in profits of 50 percent or more. While profit levels shrunk dramatically, owners were confident that they would be resilient to this shock. Sixty-three percent of owners said they were covering their expenses just with business revenue and think they could continue operating for at least three months based on how things were going.
<h4>MSMEs are trying to survive by changing business practices to boost revenue and cut costs, including reducing their labor force.</h4>
<blockquote>Half of operating microenterprises reported that they cut employees.</blockquote>
MSME owners are employing a mix of revenue-boosting and cost-cutting measures to ensure their revenues continue covering their expenses. For instance, a third of all operating businesses reported offering discounts to stimulate sales while a fifth chose to raise prices instead. Almost a fifth of businesses started a delivery service since the pandemic began. Cost-cutting measures were also common. For those businesses with employees, reducing the size of their workforce and work hours for staff was an important strategy. Half of operating microenterprises reported that they cut employees, leading to a 42 percent reduction in employment within this segment. This action likely had downstream effects. Many owners reported that they were working longer hours to meet customer demand or make ends meet, potentially a result of a reduced workforce.
<h4>In addition to their businesses, owners’ households are enduring, but data on financial tools suggests their margin of error is small.</h4>
Three-quarters of households reported that they were covering all their expenses with non-debt income sources. Severe food insecurity – defined as people going to bed hungry because of a lack of money – was relatively low at 10 percent. In comparison, CFI’s survey of urban MSME owners in Lagos, Nigeria found that 34 percent of owners reported severe food insecurity in their households.

While this is encouraging, a closer look at the financial tools owners are using to cope with the crisis suggests that conditions are likely to worsen. For example, 22 percent of owners sold a household asset to keep their business running. Of the households that sold an asset, only 63 percent reported being able to cover their expenses compared to 79 percent who did not sell an asset. Similarly, 47 percent of MSME owners reported skipping a loan payment, and those owners were less likely to have covered their household expenses by a similar margin compared to those who had made their payments.
<blockquote>Savings also appears to have collapsed in the months since the pandemic hit.</blockquote>
Savings also appears to have collapsed in the months since the pandemic hit. Since March, only 38 percent of people reported saving while 53 percent reported withdrawing money from savings. In the year prior to the pandemic, 84 percent of people reported saving compared to 54 percent who said they withdrew money. While the comparison is not one-to-one because of the different periods, it is certainly not encouraging, especially because savings is another indicator of households’ ability to cope. Ninety percent of owners who had saved since March reported being able to cover their household expenses compared to only 67 percent of owners who had not saved.

Collectively, this analysis implies respondents have dwindling financial options. Only so many assets can be sold, and savings will dry up if not replenished. Debts not repaid choke future lines of credit. These underlying patterns may help to explain a less optimistic sentiment shared by respondents: 79 percent said they could only cover their essentials for a month or less if their income sources dried up.
<h2>Summary and Reflections</h2>
Since the pandemic reached Indonesia in March, 17 percent of businesses have closed, profits have collapsed, and employment has plummeted. Women-owned businesses have been hit especially hard, with 18 percent of them closing compared to only 10 percent of male-owned businesses. Owners who managed to keep their business open reported a high degree of confidence in their ability to continue operating, relying on a mix of revenue-boosting and cost-cutting business practices to ensure their revenues continue to at least meet their expenses. This has helped stave off catastrophe at home, where food insecurity remains low and people continue to cover their household expenses.

However, data on the use of financial tools suggests owners and their households have little margin for error in the months ahead. Selling household assets, skipping loan payments, and net savings withdrawal activity indicate that respondents are already relying heavily on financial tools to meet their basic needs. Without a change in their circumstances, it is unlikely that MSME owners will be able to replenish these resources. Thus, it is reasonable to expect a worsening financial situation in the months ahead.

<em>This survey is part of our partnership with <a href="https://www.accion.org/mastercard-and-accion-partner-to-unlock-growth-for-millions-of-underserved-microbusinesses-around-the-world" target="_blank" rel="noopener noreferrer">Mastercard Center for Inclusive Growth</a> to understand the impact of COVID-19 on MSMEs.</em>

MSMEs in Indonesia Are Surviving but COVID-19 Leaves Little Margin for Error

Prior to the onset of COVID-19, very few of us would have foreseen a pandemic spreading so rapidly across the world, forcing governments to take actions like lockdowns and border closures. We have observed how these events found many essential services unprepared and resulted in businesses focusing on “response” and “recovery.” In many countries, the pandemic started as a health crisis, while in Sub-Saharan Africa it started as an <a href="https://www.worldbank.org/en/news/video/2020/04/21/africas-pulse-covid-19-coronavirus-causes-first-recession-in-25-years" target="_blank" rel="noopener noreferrer">economic one</a>, as closures happened quicker than the virus spread.

Despite the fact that many agricultural value chains are considered an essential service, agri-SMEs in Sub-Saharan Africa are still facing a <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">decline in demand</a> (particularly those providing farm inputs), <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_Summary_FINAL.pdf" target="_blank" rel="noopener noreferrer">liquidity shortfalls</a>, harvesting and production problems due to labor shortages, <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_FINAL.pdf" target="_blank" rel="noopener noreferrer">export and transportation delays due to lockdowns</a>, and cancelled international contracts. All these challenges are exacerbated by ongoing climate change-related shocks, like droughts, floods and <a href="https://www.nationalgeographic.com/science/2020/02/locust-plague-climate-science-east-africa/" target="_blank" rel="noopener noreferrer">locust plagues</a>. The resilience of agri-SMEs (small and medium-sized businesses that are formal and registered entities engaged in agricultural production) is being tested with these events.

While it is too early to estimate the full economic impact of COVID-19 on agri-SMEs, most lenders are taking steps to address the most pressing challenges faced by these agri-SMEs. Though it is prudent to move quickly to overcome these challenges, agri-SMEs would be better supported in the long run if lenders approach these problems through a systemic lens to understand the root of the challenges instead of focusing only on the symptoms of the overall shock.

Aside from the lack of infrastructure, agri-SMEs’ biggest challenge to growth is their limited access to finance and the regulatory burdens constraining this access. As will be discussed below, these challenges are deeper and more structurally embedded, and therefore require a long-term coordinated commitment to provide agri-SMEs access to capital.

This post highlights steps lenders are currently taking to help agri-SMEs weather the storm and suggests areas where they can expand their focus to support these businesses in being better prepared for future economic shocks.
<h2>Explore new options to mitigate risk and increase capital flow to agri-SMEs</h2>
Since the outbreak of the pandemic, most lenders have focused on serving existing clients by increasing their financing, restructuring loans, or deferring payments to meet their clients’ liquidity challenges. By doing so, lenders are also making sure their current portfolio is not at immediate risk.
<blockquote>It’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.</blockquote>
While lenders may be tempted to take a more conservative stance, those with sufficient capacity should be initiating even more new deals in order for agri-SMEs to keep goods and services flowing through the highly interdependent agricultural value chain. For instance, <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">72% of MSEs in Zambia</a> need working capital to continue and grow their business, and <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">61% are running on their savings</a>. COVID-19 is exacerbating the financing gap, and it’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.

Luckily, lenders have successful examples which they can use to build new and more innovative risk mitigation options. Credit guarantees, such as non-bank financial instruments that mitigate default risk for lenders in Sub-Saharan Africa, are a known practice. Between 2008 and 2015, AGRA worked with several partners to offer several guarantees to extend credit to many agriculture value chain actors in Africa, demonstrating the bankability and feasibility of investing in perceived risky agricultural businesses. Additionally, <a href="https://aceliafrica.org/" target="_blank" rel="noopener noreferrer">Aceli Africa</a> has developed a new market platform that aims to incentivize financial service providers to lend to agri-SMEs while also providing technical assistance to them.
<h2>Create new strategies to find and support agri-SMEs</h2>
Many agricultural lenders are reporting that servicing new clients has either stopped or dropped to low levels, not just because of risk concerns, but also because it is almost impossible to conduct thorough due diligence without on-site visits. Given that on-site visits may not be feasible in the near-future, lenders will want to design creative strategies and leverage data to support remote discovery of new agri-SMEs.
<blockquote>Promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics.</blockquote>
To this end, in early 2020, MIX and SCOPEinsight formed a partnership with the support of AGRA to help address the financing gap agri-SMEs face. Through this partnership, they are <a href="https://www.themix.org/news-blog/mix-and-scopeinsight-launch-partnership-with-agra" target="_blank" rel="noopener noreferrer">building bankability metrics</a> so that agricultural lenders can identify and pre-screen agri-SMEs. These metrics play an even more important role now due to COVID-19 disruptions, and they will feed into a portal which will bridge the information gap between agri-SMEs and lenders. As a result, promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics that lenders can use to reduce their costs to serve SMEs. By employing bankability metrics, lenders will be able to assess the potential for growth of agri-SMEs, which currently handle <a href="https://agrf.org/dealroom/wp-content/uploads/2020/07/AGRA-AGRF-Deal-Room-talk-by-Tom-Reardon-july20-2020-final-sent.pptx" target="_blank" rel="noopener noreferrer">680 million tons of food in Africa</a>.
<h2>Offer appropriate technical assistance to agri-SMEs</h2>
<blockquote>The key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges.</blockquote>
Several of the lenders we spoke with are increasingly providing technical assistance to agri-SMEs, recognizing that in these extraordinary times, agri-SMEs are looking for direction. Lenders are offering guidance and training on financial management, crisis management, and operating a business with limited resources. After conducting a <a href="https://rootcapital.org/wp-content/uploads/2020/06/COVID-19-client-survey-report_JUNE-2020.pdf" target="_blank" rel="noopener noreferrer">survey on COVID-19's impact on 134 of its clients</a>, Root Capital decided to offer virtual technical support through its advisory team in four areas: crisis management, emergency operations, financial management and analysis, and digital data collection and analysis.

While technical assistance is not new and is already being offered to SMEs by many organizations, the key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges, with the main goal to support agri-SMEs to grow and become bankable organizations. Helping agri-SMEs become more bankable, and thus more professionalized and visible to other lenders, can assist them to overcome barriers to financing and become more resilient and better equipped to face future risks and shocks.

Going forward, the uncertainty of this pandemic makes it unclear how the next season or harvest will affect agri-SMEs, who are <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">highly interdependent actors in an agricultural value chain</a> where one simple disruption in the flow of goods and services creates challenges for other actors. Along with prioritizing their existing clients, as they are currently doing, lenders could consider the crisis an opportunity to employ long-term strategies that can help agri-SMEs grow into resilient institutions. Coordinated responses and actions by lenders and other actors will play a critical role in ensuring that these businesses are strong enough to continue to feed the world in the face of new pandemics and other global challenges to come.

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From Crisis to Opportunity: How Can Lenders Help Build Resilient Agri-SMEs

Earlier this year, as all of us were coming to grips with COVID-19, 14 leading microfinance organizations came together to form the <a href="https://www.centerforfinancialinclusion.org/bio/microfinance-coalition" target="_blank" rel="noopener noreferrer">Microfinance Coalition</a> to represent the voice of microfinance providers globally and take collective action. This group first introduced itself in May by way of a <a href="https://www.findevgateway.org/blog-series/call-action-how-donors-investors-and-policymakers-can-help-mfis-survive-covid-19" target="_blank" rel="noopener noreferrer">call to action blog series</a>, published here and on FinDev Gateway, that targeted key stakeholders on issues essential to micro, small and medium enterprises and the financial institutions that serve them, and there have already been some positive responses in the two months since.

After an introductory post, the <a href="https://centerforfinancialinclusion.org/microfinance-coalition-call-to-action-for-investors/" target="_blank" rel="noopener noreferrer">first call to action</a> was released with a focus on the investor community. Shortly thereafter, this call was answered by the group of nine microfinance investment vehicles (MIVs) (which has now expanded to ten) that had previously issued a <a href="http://www.e-mfp.eu/sites/default/files/news2020/2020-04-24 MIV Covid-19 coordination MoU.pdf" target="_blank" rel="noopener noreferrer">Memorandum of Understanding</a> as a part of their own response to COVID-19. This group began to engage with the Microfinance Coalition to identify opportunities for collaboration, and although this engagement is still in its early stages, tangible benefits are already starting to emerge.

Broadly speaking, these benefits fall into the following three categories:
<ol>
 	<li>Fostering increased transparency and trust</li>
 	<li>Identifying specific issues on which to collaborate</li>
 	<li>Amplifying our voice in engaging with other stakeholders</li>
</ol>
<h2>Increased Transparency and Trust</h2>
It’s important to recognize that while we’re all in this together, the situation is evolving rapidly, and visibility is limited. This can lead to misunderstandings and misperceptions that only serve to heighten the sense of risk. To counter this, open dialogue and information sharing are key, and that’s precisely what this engagement has allowed for. For example, a few members of the Coalition raised concerns about whether MFIs that proactively ask for handshake agreements or inquire about flexibility with covenants might compromise their ability to obtain new loans. The MIVs responded that to the contrary, MFIs that are transparent actually make it easier for the MIVs to work with them.

Another concern was whether sharing projections that include middle- or worst-case scenarios might backfire, and the MIVs maintained that information and thoughtful analysis provide much more assurance than the lack thereof.

Thanks to this dialogue, what has emerged is a venue for exchange that will help to facilitate an even more informed and coordinated response than would have been possible otherwise.
<h2>Collaborating on Specific Issues</h2>
Our initial conversations have already surfaced a number of items on which to collaborate, including the treatment of covenants, potential ways to de-risk lending, dealing with foreign exchange risk, and managing the legal costs for any restructurings that may become necessary. However, not surprisingly, one of the items that has gotten the most immediate attention is the need for a harmonized approach to the sharing of information, especially forward-looking information.

Given all the data collection efforts that are already afoot, there's a clear recognition that the reporting burden must be kept to a minimum, and that any additional information sharing must be uniquely additive. Hence, there is a preference for projections or a package of forward-looking metrics that can be anonymized and aggregated to shed light on the potential impact that COVID-19 might have on overall MFI portfolio quality, profitability and capital adequacy on a country-by-country basis. Among other things, such information could help to anticipate solvency challenges across markets as the crisis continues to unfold.
<blockquote>Projections or a package of forward-looking metrics that can be anonymized and aggregated are preferred.</blockquote>
These data-related discussions led to a recent session during which CGAP presented the findings of its first two waves of its <a href="https://www.cgap.org/pulse" target="_blank" rel="noopener noreferrer">Global Pulse Survey of Microfinance Institutions</a> to the Coalition and MIVs, which served the dual purpose of providing reactions to CGAP on the survey and helping to inform the approach to be taken by the Coalition and MIVs on these forward-looking indicators. This engagement with CGAP is set to continue, which will help the Coalition and MIVs further define which metrics to ultimately share with each other.
<h2>Engaging with Other Stakeholders</h2>
The third benefit is the ability to leverage this platform of cooperation with the MIVs to connect with other stakeholders who are also working on their own responses. As noted above, one issue that the Coalition and MIVs would like to address is how to deal with foreign exchange risk. Hedging costs have increased, and if loans that MFIs seek to reschedule are converted into hard currency loans, that brings additional exposure to the MFIs and, by extension, to their clients.

The poor are the ones who are most vulnerable to this pandemic, so it behooves us to find solutions that don’t let such risks flow through to them. The Coalition and MIVs believe that this is an area where other players, such as development finance institutions and <a href="https://www.tcxfund.com/" target="_blank" rel="noopener noreferrer">TCX</a> (a fund that helps to manage currency risk), could be instrumental. We aim to initiate conversations with them on potential mechanisms that could be put in place to address this issue.

Looking ahead, it seems clear that we are only in the very early stages of this pandemic. We need to be taking a much longer view to our cooperation. Rather than thinking of the effects of COVID-19 as coming in waves, it may be more appropriate to see them as a sea change that we need to adapt to for the long haul.
<blockquote>COVID-19's effects might be a sea change as opposed to coming in waves.</blockquote>
We're grateful for the engagement we have seen to date, and we are optimistic about what we can accomplish together. As mentioned in our call to action blog series, there are other stakeholders, such as donors and policymakers, that also have crucial roles to play, and CFI is looking forward to helping build bridges to overcome the new sets of challenges that this pandemic has put before us.


Microfinance Coalition, MIVs Team Up in Response to COVID-19

Richard Greenberg is a Managing Director of the Social Enterprise Finance group at U.S. International Development Finance Corporation (DFC, formerly OPIC). The group leads DFC efforts to place capital in highly impactful and innovative enterprises and funds.

Like other development finance institutions, DFC – which has prioritized inclusive finance for decades to address critical challenges facing the developing world – has been hard at work supporting immediate and longer-term needs of MFIs and other actors so they can continue supporting base-of-pyramid clients during the COVID-19 crisis. In this interview with CFI, Greenberg discusses collaboration with other DFIs, DFC’s social impact initiatives that support its development goals, digitization during the pandemic, and more.
<h3>In April’s COVID-related joint <a href="https://www.dfc.gov/media/press-releases/development-finance-institutions-join-forces-respond-covid-19-developing" target="_blank" rel="noopener noreferrer">statement</a>, the <a href="https://www.dfc.gov/media/opic-press-releases/opic-signs-mou-establishing-dfi-alliance-key-allies" target="_blank" rel="noopener noreferrer">DFI Alliance</a> highlighted that its DFI members would work to address not only current liquidity issues in the financial sector, but also other measures related to essential business activities. How have you collaborated on your inclusive finance objectives since that announcement? Has there been any other inter-DFI coordination? What more could be done in this regard?</h3>
There have been extensive conversations to collaborate and coordinate with other DFIs to ensure we’re deploying our capital as efficiently as possible given the significant impacts of the crisis. The crisis has generated tremendous demand for capital from DFC and other DFIs. Since we are long-term lenders focused on our missions, in times like these, DFIs become even more important in addressing market gaps.
<blockquote>In times like these, DFIs become even more important in addressing market gaps.</blockquote>
Many of the projects that we’re looking at involve multiple DFIs. Sometimes that’s a challenge because our level of participation, our products, our policies and our risk-return requirements may all be slightly different, but these diverse strengths and capabilities are also what make our collaboration so powerful. Our goal is to make sure we can accommodate—and leverage—the differences there may be to arrive at the financing package that best supports the developmental impact we’re seeking.

We have also recently announced that DFIs have collectively <a href="https://www.dfc.gov/media/press-releases/2x-challenge-drives-groundbreaking-45-billion-women-developing-countries" target="_blank" rel="noopener noreferrer">catalyzed $4.5 billion in investment financing</a> to support women through the <a href="https://www.2xchallenge.org/" target="_blank" rel="noopener noreferrer">2X Challenge</a>, surpassing the initial goal of $3 billion. Building on DFC’s <a href="https://www.dfc.gov/our-work/2x-womens-initiative" target="_blank" rel="noopener noreferrer">2X Women’s Initiative</a>, launched in 2018, we encouraged our counterparts from G7 countries to accept the 2X Challenge by prioritizing investments in women. And it’s not just G7 countries: 15 total countries have joined to date.

Another aspect of our collaboration is discussions with DFIs and other investment partners to share market and institutional response information. One of those groups that we have joined is being led by CGAP.
<h3><strong>In addition to the recently <a href="https://yourstory.com/2020/06/funding-alert-northern-arc-us-international-development-finance-corporation" target="_blank" rel="noopener noreferrer">announced</a> $50 million of debt financing for Northern Arc, has DFC provided direct assistance to institutions support base-of-pyramid clients during these difficult times? Could you tell us a bit more about how the Northern Arc support came to pass?</strong></h3>
We’ve had a long-standing relationship with the senior management of Northern Arc (formerly IFMR Trust). They are a pioneer and a leader in wholesale finance in India. They have tremendous expertise and knowledge of the market. The proceeds of our loan to Northern Arc will be used to expand its loan portfolio in areas of importance to DFC, such as women’s economic empowerment, food security, and the WASH sector.
<blockquote>Our goal is be as responsive as we can to what the market needs at this unique time.</blockquote>
Our goal is be as responsive as we can to what the market needs at this unique time, working with established and new clients. For clients that we have previously worked with, we’ve been able to move projects forward especially quickly throughout the crisis. For example, in India, we have closed and disbursed funds to two clients, including <a href="https://www.dfc.gov/investment-story/improving-access-quality-education-india" target="_blank" rel="noopener noreferrer">Varthana</a>, an education finance company that serves low-income families, and <a href="https://yourstory.com/2020/05/funding-alert-caspian-debt-investment-from-dfc" target="_blank" rel="noopener noreferrer">Caspian</a>, an income fund manager that lends to SMEs. The debt <a href="https://economictimes.indiatimes.com/wealth/save/sbi-loan-emi-moratorium-extended-here-are-all-the-details/articleshow/76087915.cms" target="_blank" rel="noopener noreferrer">moratorium</a> in India certainly created additional risk and complexity, but the quality of these entities and the strong relationships we had with them enabled us to keep moving forward.

These are just two examples among <a href="https://www.dfc.gov/media/press-releases/dfc-approves-1-billion-investments-global-development" target="_blank" rel="noopener noreferrer">many others</a> we are supporting in developing countries reeling from COVID-19, such as Banco Industrial in <a href="https://gt.usembassy.gov/dfc-approves-a-200-million-investment-for-guatemala/" target="_blank" rel="noopener noreferrer">Guatemala</a>, whose portfolio includes 30 percent women-owned or women-led businesses, Root Capital for farmers in Latin America and Africa, <a href="https://www.dfc.gov/investment-story/supporting-worlds-smallest-farmers" target="_blank" rel="noopener noreferrer">One Acre Fund</a> supporting farmers in Kenya, and a fund managed by <a href="https://www.dfc.gov/media/press-releases/dfc-approves-nearly-900-million-global-development-projects" target="_blank" rel="noopener noreferrer">WaterEquity</a>, which lends to MFIs to improve access to reliable and clean sources of water.
<h3><strong>What about coordinating with fund managers? What role have they played?</strong></h3>
We have relationships with many of the leading global microfinance fund managers. Some of them have expanded their investment strategy to include SMEs and other financial intermediaries. Shortly after the crisis began, we were contacted by many fund managers with ideas about how to address needs by expanding existing funds, creating new funds, or reorienting funds that were already raising capital but not yet launched.
<blockquote>There are a lot of questions related to the type of capital to be deployed, the timing, and demand versus supply in various markets.</blockquote>
We are working with several of them right now, making good progress on underwriting and collaboration with other DFIs and fund managers to put together the right kind of capital for these funds so they can quickly start to deploy it. Of course, in the context of the crisis, there are a lot of questions related to the type of capital to be deployed, the timing, and demand versus supply in various markets. The base case assumption for most is that there’s going to be significant liquidity needs in the near term, though that will likely vary significantly across markets.
<h3><strong>Geographically, DFC’s microfinance/inclusive finance activities have reached a <a href="https://www.dfc.gov/sites/default/files/2019-08/fy2019_cbj.pdf" target="_blank" rel="noopener noreferrer">diverse range</a> of countries and regions. Are there any countries or regions DFC has prioritized with regards to its support of inclusive finance during COVID? Are there issues unique to specific places, or are challenges mostly universal?</strong></h3>
In terms of regions, DFC is open for business across emerging markets. We focus on low-income and lower middle-income countries. Priority regions include Africa, Latin America and the Caribbean, and the Indo-Pacific.

There are different needs and challenges around the world. The strength and resilience of financial sector institutions and regulation varies considerably, as does extent of digitization which is so important at this time. Countries are getting hit very differently and we need to account for that.
<h3>Has the crisis altered DFC’s approach to funding social impact enterprises beyond microfinance?</h3>
DFC’s <a href="https://www.dfc.gov/what-we-offer-our-products/portfolio-impact" target="_blank" rel="noopener noreferrer">Portfolio for Impact and Innovation (PI2)</a> has launched, which builds on the success of OPIC’s Portfolio for Impact (PI) initiative, introduced in 2014. PI2 is how we serve smaller, early-stage social enterprises that have a highly developmental impact but that lack scale-up capital due to their relative size, novel approach, or limited track record. Initially, financing for each project under PI2 was $1 to $5 million; now, we’re able to go up to $10 million per deal.

In the wake of COVID-19, PI2 takes on even greater importance: we know that it is often small, early-stage ventures that introduce the most innovative solutions to daunting challenges. These creative business models will be exactly what we need to navigate the many new challenges that COVID-19 has brought to emerging markets.
<h3><strong>Has the crisis shifted the perceptions of inclusive finance within DFC?</strong></h3>
Inclusive finance has been a focus of DFC for a long time. We have become one of the most significant capital providers among DFIs to microfinance over the last 10 years. This crisis is demonstrating how inclusive finance is even more essential.

Though our underwriting process is rigorous, we have leveraged information sharing with co-investors to further accelerate the deployment of capital. Additionally, in the management of our existing portfolio, we have been proactive and expeditious in trying to respond to clients who may be struggling as a result of this crisis and may need some relief.
<h3><strong>Has DFC engaged with fintechs and non-microfinance FSPs during this crisis? Are you seeing a rush to digitization among your partners? How, if at all, are your investees working to accelerate digitization for consumer segments who were conducting business primarily offline – and how might this be done <a href="https://www.centerforfinancialinclusion.org/a-covid-digitization-stampede-mustnt-trample-consumer-protection" target="_blank" rel="noopener noreferrer">safely</a>?</strong></h3>
There’s no question that, with the lockdowns, having a digital platform is critical. Some MFIs have already digitized, others less so, and the latter are of course a lot more vulnerable in these conditions.

It’s really important that those MFIs and intermediaries that need to further digitize have the opportunity and support to do that. For example, a fund manager launching a fund for which we expect to provide financing has a specific technical assistance facility that focuses on digitization. They assess an MFI’s digitization needs and can provide finance to facilitate action items. It’s important that we not only provide financing, but provide this kind of targeted support to strengthen financial institutions to which we are lending.
<h3>What about time frames? <a href="https://centerforfinancialinclusion.org/how-should-investors-coordinate-when-time-is-of-the-essence/" target="_blank" rel="noopener noreferrer">CFI</a>, the <a href="https://centerforfinancialinclusion.org/microfinance-coalition-call-to-action-for-investors/" target="_blank" rel="noopener noreferrer">Microfinance Coalition</a>, and others have identified investor medium-term needs as well as short term ones. What do you see as the medium-term needs beyond liquidity? When does the medium term “start”?</h3>
My personal interpretation is the “short term” is the next quarter or two. We’re trying to move very quickly. We don’t want to miss the opportunity to support pressing needs.

We are thinking about liquidity now and solvency issues that might arise down the road. At this time it is difficult to forecast market conditions in the coming quarters. One of our existing partners that lends to MFIs has a view that demand for their funds will slow down temporarily while others are expecting increased demand. Projecting the demand for capital in this kind of volatile market is less certain than it typically would be, so that’s creating some challenges in thinking about the risks versus returns.
<blockquote>We are thinking about liquidity now and solvency issues that might arise down the road.</blockquote>
Unfortunately, it seems likely that some people in the markets we serve who are currently middle income may lose jobs and income that will push them into a lower income level or even poverty – at least temporarily – so that could create more demand for the services from some of the institutions that we fund.

We want to support funds and intermediaries that will manage their capital prudently and avoid taking unnecessary risks. In some cases, this may mean focusing their lending initially to MFIs that are the strongest right now, and then adding institutions to their portfolios that are smaller and more vulnerable – but serve important underserved groups – over time.

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DFIs, COVID-19 and Financial Inclusion: A Conversation with Richard Greenberg of DFC

As I walked through Alaba International and Idumota markets on a recent trip to Lagos, I was in awe of the bustling scene. Not even the rainy season’s torrential downpours could silence the Afrobeat music thumping in the background as buyers and sellers jockeyed for a better deal. Alaba International and Idumota markets reign supreme in Lagos, offering all the goods one can imagine. Alaba International, on the southeastern edge of the city, bursts at the seams with satellite dishes imported from China, secondhand PlayStations shipped in from the UK, and other electronics. Idumota buzzes on Lagos Island, just south of the city center, and is a shopper’s delight replete with wax print hauled over from Ghana, locally produced Nollywood movies, and so much more.

Amidst the action in the markets, I interviewed 22 small business owners who are clients of <a href="https://www.accionmfb.com/">Accion Microfinance Bank</a> (AMfB) to learn more about their financial health and capability. This research will guide us as we develop a framework to help micro, small, and medium enterprises (MSMEs) better understand and achieve financial health. The framework is part of a project we’re undertaking with the support of the <a href="https://www.mastercardcenter.org/">Mastercard Center for Inclusive Growth</a> to increase the <a href="https://www.centerforfinancialinclusion.org/what-financial-health-means-for-small-business-owners">financial health and resilience of individuals and businesses</a> around the globe.

Through my conversations with business owners, I learned about what owners viewed as determinants of their success. We hypothesized that MSME financial health rests on three pillars — earning a profit, having access to capital to seize opportunities, and being resilient to economic shocks. The interviews suggest that our framework is on the right track. For instance, limited and slow access to working capital was commonly cited as a barrier to taking advantage of fleeting business opportunities. We also learned that resilience is not as much about cash-on-hand as it is about being able to quickly shift to other income-generating activities to fill an immediate need.

But arguably, the most eye-opening thing I learned from these interviews had to do with financial capability and the path to entrepreneurship, specifically how owners were able to get the know-how and capital to start their businesses. I had assumed that a commercial bank or <a href="http://www.iosrjournals.org/iosr-jbm/papers/Vol17-issue6/Version-2/J017626267.pdf"><em>esusu</em></a> — a rotating savings and credit association common in Nigeria — were the first two places that a budding entrepreneur would turn to raise seed funding. However, nearly all the merchants and traders I spoke with started their business with a lump sum they earned after spending several years as apprentices in their trade. This practice is part of the centuries-old Igbo apprenticeship model, <a href="https://pdfs.semanticscholar.org/c77a/7e79ec3fb7ce5c9eccdc72d181205251dfb2.pdf"><em>Imu-Ahia</em></a>.

The roots of Imu-Ahia date back to the European colonial era when the Igbo ethnic group native to southeastern Nigeria started to gain a reputation as highly-skilled traders and merchants. Today, the apprenticeship model has been widely adopted across the country. Most apprentices-to-be meet their “boss” — someone who is already well-established in a trade — through a family member or close contact. Reasons abound for why one might become an apprentice. Several entrepreneurs I spoke with decided at a young age that they wanted to be masters of a trade, so becoming an apprentice was always part of their plan. Others became an apprentice as a last resort, often after financial constraints forced them to put off academic or other pursuits.

During their tenure, which can range anywhere between three and seven years, apprentices observe and take notes on the tricks of the trade. They are assigned a variety of responsibilities, and eventually, they’re charged with promoting sales and store management. Although most apprentices aren’t paid, they are afforded accommodation, transportation costs, food, and clothing. Once the agreement — which can be either informal or formal — has been fulfilled, the newly anointed entrepreneurs are provided a lump sum to help them start their shop. One interviewee — a vendor of computer and phone accessories — was compensated with N800,000, the equivalent of approximately US$2,200, after spending five years as an apprentice. This is a decent payout considering he currently spends N350,000 (US $970) a year to rent his shop.

So what exactly does <em>Imu-Ahia</em> tell us about how these entrepreneurs perceive the determinants of their success? Many interviewees captured it perfectly when they shared advice for aspiring entrepreneurs: one must meticulously study and practice the skills needed to run a business before diving into it.

This advice resonates with our team at CFI because it positions financial capability — the knowledge, skills, attitudes, and behaviors necessary to make sound financial decisions — as <a href="https://www.centerforfinancialinclusion.org/four-reasons-focusing-on-financial-capability-is-good-business">an essential contributor to business success</a>. The apprenticeship model serves as a learning and testing ground for those who are set on eventually running their own shop, much in the <a href="https://guardian.ng/technology/apprenticeship-and-mentorship-the-key-to-technology-talent-development/">same way</a> that the modern-day business incubator serves as a testing ground for startups. By the time individuals “graduate” from the apprenticeship model, they will have developed the knowledge and skills to manage business revenues and expenses. They also have plans to take advantage of investment opportunities and experience observing how businesses respond to the ups and downs of the market.

I only interviewed former apprentices who found success in the business world, so there’s still more to learn. We need to do more to understand the relationship between financial capability and business outcomes, especially business failures. Nevertheless, these qualitative findings echo the findings of other research. The <a href="https://www.nber.org/chapters/c8222.pdf">National Bureau of Economic Research</a> conducted a fascinating study that showed the differences in the psychological profile of wage workers, own-account workers, and small and medium enterprise (SME) owners. It found that “ability, motivation, and a competitive attitude are very important in differentiating SME and microenterprise owners.” The World Bank launched a project to measure <a href="http://documents.worldbank.org/curated/en/884291527663849364/pdf/126687-18-6-2018-9-32-12-InvestigatingSMEFinancialCapabilitiesFINALWEB.pdf">financial capability of SMEs</a>. Their analysis showed a positive correlation between financial capability and a firm’s size and level of sales.

The striking thing about what we learned in Lagos is not so much that financial capability contributes to business success, it is how, in the Nigerian system such capability is learned: over a period of years, through experience, and under the watchful eye of a knowledgeable mentor.

Keep reading the <a href="https://www.centerforfinancialinclusion.org/blog">CFI Blog</a>, where we’ll share future findings as we conduct surveys around the world on MSME financial health!

What an Apprenticeship System May Reveal About the Financial Health of Small Business Owners in Nigeria

As recently as 2011, more than <a href="https://globalfindex.worldbank.org/">2.5 billion adults globally</a> did not have a formal financial account. Since then, an astonishing 1.2 billion adults have obtained an account with a bank or mobile money service, representing great strides in escaping poverty and boosting prosperity. Progress has been most notable in <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/07/GSMA-Sub-Saharan-Africa-SOTIR-presentation.pdf">Sub-Saharan Africa</a>, where account ownership increased from 23 percent in 2011 to 43 percent in 2017. This great achievement can be attributed in large part to the incredible growth of mobile money.

Mobile money has emerged as the mainstay of financial inclusion in Sub-Saharan Africa. According to the latest <a href="https://globalfindex.worldbank.org/">Findex</a> report, the share of adults with a financial institution account (excluding mobile money) across Sub-Saharan Africa has risen by a modest four percentage points between 2014 and 2017, while the share with a mobile money account has grown twice as fast, increasing by nine percentage points. With 21 percent of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This finding is confirmed by the GSMA’s own <a href="https://www.gsma.com/mobilemoneymetrics/">supply-side data on mobile money</a>, which shows that Sub-Saharan Africa <a href="https://www.gsma.com/mobilefordevelopment/africa/sub-saharan-africa-the-enduring-epicentre-of-mobile-money-part-1/">remains the epicenter</a> of mobile money.

What has underpinned this success? Regulation calibrated to enable low-cost services for the financially excluded has been crucial. In fact, we’ve found a clear correlation between countries in the region with high mobile money adoption rates and those with <a href="https://www.gsma.com/mobilefordevelopment/programme/mobile-money/introducing-the-mobile-money-regulatory-index-an-interactive-tool-to-measure-the-effectiveness-of-mobile-money-regulatory-frameworks/">more enabling regulatory environments</a>. Industry leaders in these markets adopted a myriad of strategies to drive adoption of mobile money services, but the successful strategies shared some fundamental business characteristics. The most foundational characteristic was investment in building a robust agent distribution network – a powerful model for extending the reach of financial services – which both disrupts and complements traditional “brick and mortar” banking. Mobile money agents across the region are more prevalent than any other channel, with approximately 60 agent outlets per 1,000 sq km, compared to only one bank branch and two ATMs in the same space.
<blockquote>Regulation calibrated to enable low-cost services for the financially excluded has been crucial.</blockquote>
Remarkably, and contrary to predictions, there has been a shift away from using cash toward digital payments. Across the region, people are increasingly using mobile money in diverse ways, extending beyond basic use cases such as person-to-person (P2P) transactions and airtime top ups. Today, millions of consumers are using mobile money in their daily activities: paying for children’s school fees, accessing loans to invest in their farming activities, saving for the financial future of their household, and mitigating financial risks and shocks. Innovative partnerships between mobile network operators and banks, MTOs, governments, and businesses have played a key role in digitizing payments and formalizing the economy across the region. Orange, for instance, has established partnerships with governments to offer a range of person-to-government (P2G) payments via mobile money across <a href="https://www.gsma.com/mobilefordevelopment/resources/championing-a-unified-digital-person-to-government-p2g-payments-strategy-lessons-from-orange-p2g-payments-in-africa/">five of its operations</a> in West and Central Africa (Senegal, Burkina Faso, Côte d’Ivoire, Cameroon and DRC). Another example is the partnership between PayPal and Safaricom, enabling users in Kenya to securely transfer funds between PayPal and M-Pesa.

Despite this progress, there is still a sizeable opportunity to further digitize the economy to drive efficiency and transparency, and to convert informal cash and non-financial assets into the formal financial system. This is where the shift towards a “<a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/02/Embracing-payments-as-a-platform-for-the-future-of-mobile-money.pdf">payments as a platform</a>” business model will have a demonstrable impact, not only in growing the ecosystem and incorporating more partners into the mobile money platform, but also in terms of deepening engagements with individuals and businesses. Industry-wide initiatives will also play a central role in driving the digitization of more complex use cases such as merchant payments and international remittances. <a href="https://www.gsma.com/mobilefordevelopment/uncategorized/unlocking-mobile-money-interoperability-and-merchant-payments-across-africa-through-mowali/">Mowali</a>, a joint venture between Orange Group and MTN Group to enable interoperable payments across the African continent, is a great example of industry collaboration enabling customers to seamlessly transact across borders.
<h2>Challenges Ahead</h2>
Sub-Saharan Africa has come a long way in the past decade, but there are still strides to be made in certain markers, and across the wider African continent. Africa’s three most populated countries, Nigeria, Ethiopia and Egypt – home to a combined adult population of over 242 million – have low rates of financial inclusion (below 40 percent) and limited availability of mobile money services. All three markets have had unfavorable conditions for mobile money uptake. We anticipate that recent reforms in these markets could spark a wave of adoption with the potential to unlock over 110 million new mobile money accounts in the next five years, offering a financial future to millions of previously financially excluded people.

Micro, small and medium-sized enterprises (MSMEs) play a major role in economic development across the region. According to the IFC, MSMEs account for roughly <a href="https://www.ifc.org/wps/wcm/connect/2c6289c3-df5e-4f90-b910-2a04e1000922/IFC+SME+Ventures+Final+low+res+30+Nov+2018.pdf?MOD=AJPERES&amp;CVID=mtQwg2S">90 percent of all businesses</a> across Sub-Saharan Africa, and contribute to 78 percent of the region’s employment. Despite this, financial institutions are not currently meeting the majority of MSMEs’ financial needs across the region. We see a huge opportunity for mobile money providers to bridge this gap and offer solutions that can help MSMEs with day-to-day management of their business and financing needs.
<blockquote>Mobile money providers can offer solutions to help MSMEs with day-to-day management of business and financing needs.</blockquote>
Over the course of the next decade, a dramatic rise in mobile internet usage and smartphone adoption is expected in Sub-Saharan Africa. This growth, alongside the shift to “payments as a platform” model, will empower millions of young entrepreneurs, innovators and small businesses to maximize new income generation opportunities and gain new skills. Increased access to financial services is a cornerstone of prosperity, and the future for financial inclusion in Sub-Saharan Africa holds much promise.

<em>Learn more by checking out GSMA's <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/07/GSMA-Sub-Saharan-Africa-SOTIR-presentation.pdf">State of the Mobile Money Industry in Sub-Saharan Africa</a> presentation.</em>

Sub-Saharan Africa Mobile Money: Diverse Use Cases, Enabling Environment Boost Adoption

This blog from <a href="https://us.accion.org/">Accion in the U.S.</a> was originally posted on <a href="https://nextbillion.net/impact-of-small-business-lending/">NextBillion</a> and is re-published here with permission.

<em>By Gina Harman, CEO, Accion in the U.S., and Liz Urrutia, CEO, Opportunity International</em>

The field of microfinance arose to address a pressing problem in emerging markets: Billions of people around the globe were shut out of, or poorly served by, the financial sector. But while microfinance institutions grew rapidly around the globe, so too did economic inequality in developed countries. It was within this context that organizations like <a href="http://us.accion.org/" target="_blank" rel="noopener">Accion in the U.S.</a> and <a href="http://opportunityfund.org/" target="_blank" rel="noopener">Opportunity Fund</a> adapted the microlending model to the United States more than two decades ago, expanding access to economic opportunity for entrepreneurs who lacked the financing and resources they needed to start or grow their businesses. In the ensuing years, the mission-based lending industry has continued to expand its services across the country – <a href="https://ofn.org/sites/default/files/OFN_20_Years_Opportunity_Finance_Report.pdf" target="_blank" rel="noopener">even in times of economic recession</a>.
<h2>From Financial Inclusion to Financial Health</h2>
In the early days, progress toward our mission could be measured by portfolio numbers, such as number of loans disbursed and amount of capital deployed, as well as by evaluating how many of our clients were from traditionally underserved populations, such as people of color, women and low- to moderate-income individuals. However, we also understood that gaining access to financial services is only meaningful if that access places an individual on a path to greater financial stability and improved quality of life. In short, financial inclusion does not necessarily enable financial health.

Over time, with support from the <a href="https://microtracker.org/assets/documents/entrepreneurtracker-overview.pdf" target="_blank" rel="noopener">Aspen Institute’s EntrepreneurTracker</a> initiative, our organizations have been able to evaluate borrower outcomes such as business survival, revenue growth and job creation in the years following loan disbursement. Still, we knew that these numbers alone didn’t tell the full story. That’s why we kicked off a <a href="https://us.accion.org/impact-study/" target="_blank" rel="noopener">multi-year, mixed methods study</a> in 2015 to more fully understand the impact of our lending and advising services over a longer time horizon. This research, conducted by Harder+Company Community Research, was made possible through lead funding from the W.K. Kellogg Foundation and JPMorgan Chase &amp; Co., with additional support from S&amp;P Global.
<h2>How Are Our Clients Faring?</h2>
The results of this research revealed that, by and large, the entrepreneurs we serve are thriving, even two to three years after receiving their loan. Most businesses in the study increased sales (60 percent) and profit (57 percent). Forty percent of borrowers added employees during the study period, and entrepreneurs with employees significantly increased benefits provided to those employees. What’s more, the majority of study participants specifically attributed progress toward their business and personal goals to the services they received from Accion or Opportunity Fund.

This study also provided unprecedented insight into the emotional benefits of mission-based small business lending. At the end of the study, 63 percent of participants expressed that support from their lender had “a lot” of positive impact on their confidence. In follow-up interviews, entrepreneurs discussed the demoralizing effect of previous loan rejections, sharing that the approval from Accion or Opportunity Fund was a sign that someone believed in them. As one participant put it: “The biggest thing has been the confidence that I’ve gained in myself. I’m really proud of it.”

But the report also highlighted some ongoing challenges – among them, the fact that financial health remains a key need among the business owners we serve. For example, the majority of clients surveyed at the end of the study had not taken steps to prepare for a financial emergency (55 percent) and found finances to be a significant source of stress (58 percent). This was a statistically significant improvement from the beginning of the study, when only 36 percent of participants had prepared for a financial emergency and 71 percent reported significant anxiety about finances. Nevertheless, though these findings indicate that our clients are on the path to greater financial stability, they remain vulnerable to financial shocks.
<h2>Defining Success on Entrepreneurs' Terms</h2>
The multifaceted nature of the study findings illuminates the limitations of a “one-size-fits-all” definition of impact. For instance, as the mission-based lending field moves beyond measures of inclusion to focus on borrower outcomes, traditional metrics like revenue growth and job creation don’t necessarily align with entrepreneurs’ own definitions of success. That’s why the research employed a technique called cluster analysis, which revealed five distinct typologies of entrepreneurs, each with unique goals, challenges and successes.

For example, the <i>Focused and Growing</i> group (44 percent of the sample) sought to grow, and succeeded. By the end of the study, they had all moved into their businesses full-time, had successfully used their loans to expand their businesses, and were experiencing increased sales and profits.

In comparison, the <i>Stable and Strategic </i>group (12 percent of the sample) juggled multiple sources of income while carefully planning for long-term, safe business growth. They increased their financial stability over the study period, and they also reported increased quality of life.

For the <i>Off Balance and Seasonal</i> group (9 percent of the sample), unexpected hardships and seasonal cash flow meant that their main priority was keeping their business afloat. In follow-up interviews they expressed an appreciation for the tailored support and guidance they received from their lender to help them weather financial challenges.

Borrowers in the <em>Retrenching</em> group (19 percent of the sample), were most likely to have used their loan to start a new business. While most experienced business growth over the study period, very few reported taking a salary from the business. Nevertheless, they remained confident about their financial future at the end of the study and reported a significant decrease in financial stress.

For those in the Slowly Growing and Optimistic group (17 percent of the sample), key goals for business ownership included fulfilling a specific dream or becoming their own boss. Although the majority experienced increases in sales, most were not able to increase savings, and some had even drained their savings over the study period. Many of these entrepreneurs operated highly specialized businesses with unpredictable cash flows, and were looking for opportunities to diversify their offerings.

With the completion of this research, we have gained invaluable insights into the impact of our services – as defined by our clients. As our organizations look to expand access to high quality, transparent and affordable financial services, it will be crucial to continue to refine our definitions of success, and to iterate and design new products and services to best align with their needs.

&nbsp;

&nbsp;

Beyond Inclusion: How Mission-Based Small Business Lenders in the U.S. Are Evolving Their Definition of Impact

Mayada El-Zoghbi

Managing Director

Maha Khan

Simon Agez

Machal Karim

Camilla Nestor

Mark Pickens

Joanna Ledgerwood

David Ferrand

Eric Noggle

Eda Dokle

Ethan Loufield

Richard  Greenberg

Jacqueline Foelster

Nika Naghavi

Gina Harman

Tess Johnson

Daniel Balson

Amee Parbhoo

Carmen Paraison

Christy Stickney

South Asia

Sub-Saharan Africa

Indonesia

India

Latin America and The Caribbean

Nigeria

United States

Russian Federation

Uzbekistan

Ecuador

Financial Service Providers

Fintechs

MSME/SME Finance

Responsible Digital Finance

Banks

Challenges and Crises

Consumer Protection

Digital Credit

Digital Financial Services

Microfinance

Microfinance Institutions

Resilience

Responsible Investing

Supply Chain Finance

Women

Agricultural and Rural Finance

Policy, Regulation and Government Initiatives

Smallholder Farmers

Data Analytics

Entrepreneurs of MSMEs

Financial Health

Underserved Groups

Credit

Enabling Environment

Credit Provision

Underwriting

Financial Capability

Agent Banking

Delivery Channels

Mobile Banking

Payments

Customer Centricity

Financial Technology

Alternative Data

Impact Investing

Insurance

Insurtech

Neobanks

PayGo

Refugees and Migrants

Remittances

Brief

Blog Post

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

It’s the most wonderful time of the year! We are thrilled to announce that we are <a href="http://www.centerforfinancialinclusion.org/storage/documents/CFI_Fellows_2018_RFP_2018-05-07.pdf">now accepting proposals</a> for the 2018 cohort of CFI Fellows.

Building upon the impact of the <a href="http://bit.ly/CFI-Fellows">CFI Fellows Program</a> over the past three years, we’re looking for proposals from researchers and practitioners with demonstrated experience executing high-quality research projects from start to finish. Successful proposals will articulate a thoughtful and feasible response to one of the questions in our research agenda.

This year’s research agenda reflects an exhaustive consultative process, and thanks to <a href="https://cfi-blog.org/2018/04/12/help-us-shape-our-fellows-program-research-agenda/">your help</a>, we’ll be selecting proposals that best address one of the following topics:
<ol>
 	<li><strong>How do financial institutions use mass APIs, open APIs, custom APIs and bespoke partnerships to partner effectively with fintechs to reach the underserved? </strong></li>
</ol>
Financial institutions of all sizes are finding that <a href="http://bit.ly/PartneringFintechs">partnerships with fin</a><a href="http://bit.ly/PartneringFintechs">techs</a> can help them reach underserved customer segments, and increasingly, these partnerships use APIs to create the necessary connections that enable data sharing between fintechs and financial institutions. However, it may be especially challenging for smaller financial institutions to benefit from such connections. How do recent efforts to create more accessible APIs function? Which models are working well? Research should include a comparison between mass APIs, API marketplaces, open APIs, bespoke APIs, and custom partnerships, recognizing that there are opportunities and challenges associated with each.
<ol start="2">
 	<li><strong>How do electronic invoicing (e-invoicing) and other electronic filing mandates enable financial services providers to make better decisions about MSME lending? Have more MSMEs become financially included as a result of these efforts? </strong></li>
</ol>
We’ve seen that e-invoicing is being mandated by governments across Latin America and in selected other countries as a tax compliance initiative (<a href="https://assets.kpmg.com/content/dam/kpmg/us/pdf/2017/10/mandate-for-e-invoicing-adoption-kpmg.pdf">KPMG, 2017</a>) and we expect that this practice may have spillover effects for financial inclusion. Through the collection and analysis of rich transaction data from micro, small and medium enterprises (MSMEs) that electronic invoicing provides, lenders are finding new ways of assessing this customer segment. This research will identify which providers are leveraging this data to improve their lending operations for MSMEs and through what means.
<ol start="3">
 	<li><strong>How can employers in developing countries support the financial health of their employees?</strong></li>
</ol>
Financial health is an increasingly important concept in the financial inclusion ecosystem, but we find that one often overlooked set of actors is employers. Employers have an important stake in the financial health of their employees, as financial challenges can create stress, absenteeism and other problems. This fellowship will explore the research on financial stress and employment to better articulate why employers in emerging markets should care about financial health, the interest of employers in active involvement, examples of good practice and/or tools or resources that employers need to get involved.
<ol start="4">
 	<li><strong>What is the landscape of financial products and services designed to</strong><strong> meet previously underserved consumers’ (physical) health needs? </strong></li>
</ol>
This fellowship will review the current status of health finance initiatives in the developing world or in a region or set of countries. It will identify and analyze the key challenges that existing programs encounter, with reference to the most successful models.

If you are passionate about financial inclusion, can craft a high-quality research plan that demonstrates a thoughtful approach, and have relevant experience in producing impactful analytic work, we want you to submit a proposal or share this opportunity with a colleague.

For more information (or inspiration), visit <a href="http://bit.ly/CFI-Fellows">our website</a>, view the full <a href="http://www.centerforfinancialinclusion.org/storage/documents/CFI_Fellows_2018_RFP_2018-05-07.pdf">request for proposals</a>, or email <a href="mailto:tjohnson@accion.org?subject=Question%20About%20CFI%20Fellows%20Program%202018">Tess Johnson</a>. We can’t wait to see how you tackle these questions!

&nbsp;

&nbsp;

CFI Fellows Program Now Accepting Proposals

<em>&gt; Posted by Anisha Singh, Senior Research Associate, IFMR LEAD</em>

<em><img class="alignright wp-image-24670" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/thumb_72f989620eb54da896649a8461a443a6.jpg" alt="" width="515" height="343" /></em>

<em>Want to receive payments from customers? There’s an app for that. Want to make payments to suppliers? There’s an app for that. Customer wants to pay you one week from now? Scramble to take out diary and note down payment receivable. Customer is not contactable after one week? Oh well, that’s the end of that.</em>

Among merchants in India, widespread awareness of available digital financial services options has not translated into usage of these services. The core challenge here is making digital platforms more inclusive and relevant to their daily lives. While India has made immense progress in transitioning to a less cash-reliant financial ecosystem, recent research concludes that the services on offer in the country do not directly address all relevant merchant pain points and thereby fall short of providing a compelling value proposition for them to make the switch from cash. This shortcoming hasn’t been for lack of trying. Researchers and providers have identified and rolled out various new value-added services that could help increase this value proposition. However, for merchants in India, there is still one key transaction type left unaddressed: how can informal arrangements, such as offering goods on credit, be included in digital services?
<h3>What’s at the heart of merchant transactions?</h3>
Recent research by IFMR LEAD in the space of digital finance for micro-merchants across urban and rural regions of four Indian states suggests that as many as 20 percent of micro-merchants use extensions of credit as their primary transaction method with suppliers as well as with customers. For the majority of merchants surveyed, over 20 percent of the value of their monthly transactions with suppliers and customers is on credit. Merchants typically extend credit to customers for up to two weeks and receive credit from suppliers for up to a month. Credit from suppliers tends to be more formal than credit to customers. Merchants often sign a promissory note while taking goods on credit from suppliers, whereas they deem a simple note in their inventory books sufficient for extending credit to customers.
<h3><strong>What does an ideal</strong> digital<strong> product look like for merchants?</strong></h3>
There is much excitement and openness among merchants to experiment with digital modes and include payment applications such as mobile wallets and QR codes into their daily business operations. However to make it worthwhile for merchants to transact digitally, it is necessary to build a holistic service that includes credit extension. We collected first-hand insights from merchants to understand their preferences and concerns regarding such a service:
<ul>
 	<li>On the supplier side, merchants were not in favor of direct debits from their accounts at a later date for goods received on credit. However, a majority noted the importance of a reminder service to make payments in the form of SMS messages or push notifications. Product provisions to record inventory purchased on credit, make standard monthly digital payments, and record signatures from suppliers for the verbal credit agreements were the next most preferred features.</li>
 	<li><em>‘Facebook’ for merchants: </em>A significant proportion of merchants also indicated their preference for a networking platform wherein they can interact with their suppliers through personalized user accounts. By logging into their account, they would like to be able to see all their suppliers, open chat conversations with individual suppliers, and send them push notifications requesting additional stock or extension of credit terms and such.</li>
 	<li>On the consumer side, merchants are concerned with customers not paying them back and having no way to trace them. The majority of merchants stressed the value of a reminder service through SMS or push notifications to alert customers of their pending payments and allow them to make the transaction digitally without visiting the merchant..</li>
 	<li>Surprisingly, merchants did not express a need for an inventory management component to record goods given on credit and payments collected from customers. Merchants believed that a strong back-end system through inventory management with suppliers would sufficiently translate into better management of credit terms with customers.</li>
 	<li>Across the board, merchants stressed their requests for these features to come at a low cost with low transaction fees. Furthermore, they indicated that services should incorporate credit limits on the amounts that can be extended in supplier and customer interactions and the potential for credit limits to be monitored and enhanced based on transaction history.</li>
</ul>
With high awareness but low usage of digital platforms among merchants in India, exploring such value-added services for merchants is a must to ensure greater uptake and continued usage. However, to ensure sustainability of such products, it is equally imperative to explore ‘stickiness’ for customers and other players in the merchant ecosystem as well.

<em>This post draws on IFMR LEAD’s work in collaboration with J.P. Morgan on '</em><a href="http://ifmrlead.org/process-mapping-and-evaluation-of-digital-financial-services-in-india/"><em>Digital Financial Inclusion and Consumer Capabilities in India</em></a>' <em>and with the Mastercard Center for Inclusive Growth on '<a href="http://ifmrlead.org/the-evolving-financial-ecosystem-for-micro-merchants-in-india/">The Evolving Financial Ecosystem for Micro-Merchants in India</a>'.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/07/10/how-a-human-touch-agent-can-make-a-difference-in-promoting-digital-financial-services/">How a Human Touch Agent Can Make a Difference in Promoting Digital Financial Services</a>

<a href="https://cfi-blog.org/2016/08/11/exploring-responsible-agent-management-in-india/">Exploring Responsible Agent Management in India</a>

<a href="https://cfi-blog.org/2016/09/12/digitizing-self-help-groups-in-india/">Digitizing Self-Help Groups in India</a>

&nbsp;

What’s in It for Me? Increasing the Value Proposition of Fintech for Merchants in India

<em>&gt; Posted by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign</em>

[caption id="attachment_23879" align="aligncenter" width="615"]<a href="https://www.flickr.com/photos/worldbank/4248402729/in/album-72157631291110788/"><img class="wp-image-23879" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/4248402729_409bc54767_b.jpg" alt="" width="615" height="409" /></a> Outside the Tosh Hovli Stone Palace of Khiva, an Uzbek lady practices her craft, knitting.[/caption]

At the Center for Financial Inclusion (CFI), we spend a lot of time thinking of ways economically marginalized people can gain access to the capital they need to lift themselves out of poverty. Through our work, we’ve repeatedly seen that, while talent is universal, opportunity is not. Large swathes of the population across the developing world have limited access to the formal financial system and are stuck managing money in ways that are often inconvenient, inefficient, and sometimes even involve humiliation and abuse.

Focusing on places where economically vulnerable people are at risk, however instructive, risks obscuring the fact that great divides exist across gender in many diverse geographies. In developed countries as in the developing nations, women lag behind men in indicators that measure entrepreneurship and economic empowerment. Their societies are poorer for it. In the U.K., women-led businesses are far less likely to secure financing; <a href="https://www.forbes.com/sites/davidprosser/2017/03/27/eight-stats-that-show-how-britain-fails-its-female-entrepreneurs/#4cbe7ae174bd">91 percent of investment</a> was directed to companies without even one female founder. In the U.S., women <a href="https://www.nytimes.com/2017/06/09/upshot/why-women-dont-see-themselves-as-entrepreneurs.html">make up half the labor force</a> but own just a third of all companies.

The reasons for these discrepancies are myriad. Women are often shut out of informal “old-boy networks” where entrepreneurs can find critical funding, support, and advice. Women are <a href="https://cfi-blog.org/2017/02/02/5141000-reasons-women-marched/">less likely than men</a> to have experienced role models who understand their challenges. Starting a business is a lonely endeavor and the absence of a mentor can make it even lonelier. As amply demonstrated by recent scandals in Silicon Valley, including at the ride-sharing app <a href="https://www.theguardian.com/technology/2017/jun/13/david-bonderman-resigns-uber-board-sexist-remark">Uber</a> and venture capital fund <a href="http://www.slate.com/blogs/the_slatest/2017/07/04/silicon_valley_investor_dave_mcclure_resigns_after_harassment_claims_i_m.html">500 Start-ups</a>, plain sexism and discrimination play a role as well. <a href="https://www.nytimes.com/2017/07/21/sunday-review/women-ceos-glass-ceiling.html?ref=opinion">A 2016 survey</a> that polled over 34,000 people found that women who angled for a promotion were 30 percent more likely to be labeled as "bossy," "intimidating," and "aggressive" as their male counterparts.

Across many countries where CFI works, women entrepreneurs must contend with these challenges as well as numerous others. Central Asia offers an instructive example. The region is steeped in a Soviet-era mythos of gender equality, where women are portrayed as having thrown off the veil and grabbed the factory lathe. The reality is quite different.

Throughout Central Asia, millions of men leave their families to search for economic opportunities abroad. In 2016, <a href="https://www.theguardian.com/world/2016/may/19/eastern-promises-migrant-workers-turning-backs-russia">some 2 million Uzbek men</a>, representing almost 13 percent of the country’s entire male population, were working in Russia. As a result, millions of women are left to raise children themselves while working to supplement meager remittances. Central Asian families are large and close knit, with Kyrgyz and Tajik women giving birth to <a href="http://www.un.org/en/development/desa/population/publications/pdf/fertility/world-fertility-patterns-2015.pdf">more than three children</a> on average. Younger women are also expected to care for elderly family members as they near the end of their lives. With no men to assist them, caregiving responsibilities add up quickly and women have little time and money to dedicate to entrepreneurship.

The women who manage to start a business of their own will face serious obstacles. Investors working in the region have told CFI that financial institutions often view female borrowers as riskier and less loyal clients than their male counterparts. Women face a higher rate of loan rejection though women generate a <a href="http://documents.worldbank.org/curated/en/479131468250293544/pdf/659310WP00PUBL065737B0Gender0Report.pdf">similar level of profit per unit of revenue</a> as men. Regional participants in the financial inclusion sector observe that, when data is held constant for capital and sector, there is no evidence that women-run businesses are less successful or that they generate a smaller return.

Female borrowers who are able to secure a loan face a very firm and very low glass ceiling; women borrow more often than men but at lower levels and thus face substantial difficulty evolving their small businesses to SME-level enterprises. While a bakery run by a man may soon grow to a catering company or a restaurant, women-owned shops will frequently remain small-scale sole proprietorships.

The difficulty Central Asian businesswomen have in reaching scale may be partially explained by how their household obligations incentivize a certain type of borrowing and spending. In October 2016, CFI research fellow Christy Stickney, developed a report entitled, <em><a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/762">Emerging SMEs: Secrets to Growth from Micro to Small Enterprise</a></em>. The report used qualitative research to identify and analyze Latin American clients whose borrowing had increased significantly over time. Unlike their Central Asian counterparts, the women covered in Stickney’s report had no difficulty accessing credit and did not report facing discrimination from loan officers. Nonetheless, the report found that, like women in Central Asian, Latin American women do not feature prominently as lead owners or owner-managers of higher growth businesses. The reason for this seems to be that women’s investment strategies are more diverse than men. So, while women covered in the report actually tended to borrow more than men, they did so to invest in education opportunities for their children, support their elderly in-laws, and repair their homes rather than pour their capital into a single high-growth business model.

Family dynamics hinder female entrepreneurship in other ways. Most Central Asian financial institutions only accept fixed assets as collateral and, because such assets are registered only in the husband’s name, women are unable to secure collateralized debt while their husbands work abroad. In recent years, many men have returned home, pushed by Russia’s tightening immigration policies, collapsing ruble and softening economy. Yet their repatriation does little to liberate their wives’ entrepreneurial ambitions. One representative of a multilateral institution, who requested anonymity in order to speak frankly about the region’s challenges, told CFI that returning remittance men often fund their own businesses by cannibalizing credit originally allotted to their spouse.

Gender-based discrimination results not only in denial of financing but often in <a href="http://centralasiaprogram.org/blog/2016/02/17/the-marginalization-of-rural-women-entrepreneurs-in-tajikistan/">denial of land rights</a> and decision-making authority over its use. In rural Central Asia, where agriculture remains the primary economic activity, local farming collectives are chiefly responsible for allocating land plots and determining how they will be used. Women are frequently denied decision-making roles on these bodies and often lack the mechanisms necessary to make their voices, and their ideas, heard.

While these challenges are substantial, they are hardly insurmountable. In the second part of this series, we’ll consider how some programs are unleashing Central Asian women’s entrepreneurial spirit. We’ll look at how investors, financial institutions, government authorities, and other stakeholders can ensure that women receive equal access to capital and make capital markets work for them and their businesses. We’ll also explore steps financial service providers and regulators can take to ensure that women entering into the formal economy for the first time have their rights protected. Finally, we’ll consider whether any of these innovative strategies can offer insights on how best to address gender disparities in the U.S.

<em>Image credit: <a href="https://www.flickr.com/photos/worldbank/4248402729/in/album-72157631291110788/">Brigitte Brefort / The World Bank</a></em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/04/20/g2p-and-gender-when-will-pakistani-women-be-able-to-withdraw-their-own-money/">G2P and Gender: When Will Pakistani Women Be Able to Withdraw Their Own Money?</a>

<a href="https://cfi-blog.org/2016/01/11/celebrating-women-leaders-profiles-of-financial-inclusion-pioneers/">Celebrating Women Leaders: Profiles of Financial Inclusion Pioneers</a>

<a href="https://cfi-blog.org/2017/02/24/why-women-in-smes-lean-out/">Why Women in SMEs Lean Out</a>

Gender-Based Financial Exclusion in Central Asia

<em>The following post was <a href="http://blogs.accion.org/features/7-fintech-trends-to-watch-in-2018/">originally published</a> on the Accion blog.</em>
<p id="46a8" class="graf graf--p graf-after--h4">We’re in the middle of a fintech boom that <a class="markup--anchor markup--p-anchor" href="https://medium.com/accion/trends-that-may-change-the-world-c00f4e500a8c" target="_blank" rel="noopener noreferrer">could change the world</a>. As a seed-stage investor in fintech for the underserved, Accion Venture Lab continues to see innovative startups increasing access to, reducing the cost of, or improving the quality of financial services for underserved individuals and small businesses around the world.</p>
<p id="c50b" class="graf graf--p graf-after--p">As we kick off a new year, we’re particularly excited about seven areas of startup-led innovation.</p>

<h4>Digital neobanks</h4>
[caption id="attachment_24930" align="aligncenter" width="616"]<img class="wp-image-24930" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/appsm_mockup2.jpg" alt="" width="616" height="411" /> SmartMEI is a digital neobank serving small businesses in Brazil[/caption]
<p class="graf graf--p">In the last few years, we’ve seen the emergence of a number of digital neobanks. Neobanks offer a user-friendly digital interface and a platform for financial services without maintaining their own banking licenses. With a focus on user experience and digital applications, neobanks stand to offer faster and better service to the underserved. Moving forward, neobanks will need to provide both a compelling product for a targeted customer segment and a suite of offerings that go beyond basic accounts or credit cards to retain customers and improve unit economics. Innovators in this space include <a class="markup--anchor markup--p-anchor" href="http://nowmoney.me/" target="_blank" rel="nofollow noopener noreferrer">NOW Money</a>, which offers migrant workers in the UAE a platform to more efficiently transfer remittances and access to other products and services over time, and <a class="markup--anchor markup--p-anchor" href="https://www.smartmei.com.br/" target="_blank" rel="nofollow noopener noreferrer">SmartMEI</a>, which offers small businesses in Brazil a free tax tool and access to a broader set of financial services.</p>

<h4>Next gen small business finance solutions</h4>
<p class="graf graf--p">Around the world, micro, small, and medium enterprises (MSMEs) struggle to access capital. Estimates suggest that <a class="markup--anchor markup--p-anchor" href="https://www.ifc.org/wps/wcm/connect/4d6e6400416896c09494b79e78015671/Closing+the+Credit+Gap+Report-FinalLatest.pdf?MOD=AJPERES" target="_blank" rel="nofollow noopener noreferrer">200 to 245 million formal and informal small businesses</a> either don’t have a loan or have one but are still constrained by their access to financing. Startups have been developing creative ways to acquire, underwrite, and fund these businesses. Some of the most innovative models today are embedding themselves into supply chains and working with a partner in that supply chain to identify MSMEs in need of financing and to obtain existing data that can support credit decision-making. These companies include <a class="markup--anchor markup--p-anchor" href="http://www.tiendapago.com/en/" target="_blank" rel="nofollow noopener noreferrer">Tienda Pago</a>, which partners with major consumer good distributors in Peru and Mexico to extend short-term working capital to small stores for inventory purchases, and <a class="markup--anchor markup--p-anchor" href="https://lidya.co/" target="_blank" rel="nofollow noopener noreferrer">Lidya</a>, which works through partners in Nigeria to provide invoice discounting and supply chain financing to small businesses.</p>

<h4>Insurtech for the underserved</h4>
<p class="graf graf--p">Low-income consumers in emerging markets need insurance products to manage and mitigate financial risks, but serving those customers poses significant challenges — from cost-effectively reaching and educating consumers, to accurately assessing and pricing risks, to efficiently managing claims. Startups can play a critical role in solving those challenges with products intended to address specific risks for underserved communities, new distribution channels to reach these populations, and new streams of data to more effectively assess and price risk. Insurtech innovators include <a class="markup--anchor markup--p-anchor" href="https://lumkani.com/" target="_blank" rel="nofollow noopener noreferrer">Lumkani</a>, which sells a low-cost heat detector bundled with insurance to households in South African informal settlements that protect against loss of life, shelter, and assets, and <a class="markup--anchor markup--p-anchor" href="https://togarantido.com.br/" target="_blank" rel="nofollow noopener noreferrer">Togarantido</a>, which serves as an online-based insurance broker focused on the underserved in Brazil.</p>

<h4>Financial services for smallholder farmers</h4>
<p class="graf graf--p">Smallholder farmers remain notoriously difficult to reach and are often considered high-risk clients since their incomes are tied to unpredictable harvests. An estimated <a class="markup--anchor markup--p-anchor" href="https://www.raflearning.org/post/inflection-point-unlocking-growth-era-farmer-finance" target="_blank" rel="nofollow noopener noreferrer">270 million smallholder farmers around the world face a financing gap of $170 billion</a>. Innovators addressing this need can provide real value — by helping farmers finance irrigation pumps, combat pests, or address climate risks. Startups in this space include <a class="markup--anchor markup--p-anchor" href="https://apolloagriculture.com/" target="_blank" rel="nofollow noopener noreferrer">Apollo Agriculture</a>, which leverages satellite imagery, data science, and mobile money to finance fertilizer and seeds needed to increase crop yields, and <a class="markup--anchor markup--p-anchor" href="https://www.pula-advisors.com/" target="_blank" rel="nofollow noopener noreferrer">Pula</a>, which works with large seed and fertilizer suppliers across Africa to bundle crop insurance in with product purchases.</p>

<h4>Asset finance</h4>
[caption id="attachment_24931" align="aligncenter" width="615"]<img class="wp-image-24931" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/kn_pg_2016_25.jpg" alt="" width="615" height="410" /> The Paygo team at work on their smart meter for cooking gas[/caption]
<p class="graf graf--p">Individuals and small businesses require financing for assets like medical equipment, smartphones, and solar home systems to increase efficiency and improve lives. One promising innovation in this space is pay-as-you-go financing, which allows consumers and business owners to make small upfront payments and regular “top-ups,” usually sent via mobile money. The model has already led to a rapid expansion in solar home systems across emerging markets. Other scalable models for asset financing leverage new distribution and payment approaches like layaway solutions, leasing models, and peer-to-peer transfers. <a class="markup--anchor markup--p-anchor" href="http://paygoenergy.org/" target="_blank" rel="nofollow noopener noreferrer">PayGo Energy</a> is a promising company in this space; its pay-as-you-go financing model enables low-income customers in Kenya to pre-pay for cleaner and more affordable cooking gas.</p>

<h4>All-digital consumer lending</h4>
<p class="graf graf--p">Recent years have seen digital consumer lenders emerge and scale by using simple apps to collect and analyze customer data to provide access to credit for underserved populations. The speed and accessibility of digital platforms enable credit access for consumers who are underserved by traditional lenders and who might otherwise be too costly to serve. Innovators could add value to the sector with new approaches to credit underwriting and consumer engagement that lower defaults and improve retention — two of the critical challenges to the app-based lending model. <a class="markup--anchor markup--p-anchor" href="http://smartcoin.co.in/" target="_blank" rel="nofollow noopener noreferrer">SmartCoin</a> offers new engagement tools alongside its mobile lending platform to better understand and serve its customers in India, and <a class="markup--anchor markup--p-anchor" href="https://www.tezfinancialservices.pk/" target="_blank" rel="nofollow noopener noreferrer">Tez</a> provides an all-digital banking platform with a full suite of products to low-income consumers in Pakistan.</p>

<h4>Consumer financial health</h4>
<p id="ce83" class="graf graf--p graf-after--p">In 2016, the Federal Reserve revealed a concerning statistic about financial health in the U.S.: 46 percent of Americans said they could not pull together <a class="markup--anchor markup--p-anchor" href="https://www.washingtonpost.com/news/wonk/wp/2016/05/25/the-shocking-number-of-americans-who-cant-cover-a-400-expense/?utm_term=.893f79e72c4c" target="_blank" rel="nofollow noopener noreferrer">$400 to cover an emergency</a>. Startups are providing solutions that help consumers manage their day-to-day financial lives and rebound from shocks. There is significant potential for innovators to leverage behavioral science to design new solutions such as clever nudges, useful automation, gamification, or bundling across different financial products. Innovators in this space include <a class="markup--anchor markup--p-anchor" href="https://www.lendstreet.com/" target="_blank" rel="nofollow noopener noreferrer">Lendstreet</a>, which focuses on financial health by providing U.S. consumers a platform to restructure and refinance their distressed debt and rebuild their credit, and <a class="markup--anchor markup--p-anchor" href="https://www.destacame.cl/" target="_blank" rel="nofollow noopener noreferrer">Destacame</a>, which empowers users in Mexico and Chile with control of their data to build their financial capabilities and access better financial products.</p>
<p id="2358" class="graf graf--p graf-after--p">Each of these areas of startup-led innovation offers significant potential for both social impact for underserved consumers and financial profit in 2018. We’re excited to see what’s next.</p>
<em>Image credits: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/02/27/kopo-kopo-building-on-the-rails-of-mobile-money-in-kenya/">Kopo Kopo: Building on the Rails of Mobile Money in Kenya</a>

<a href="https://cfi-blog.org/2017/08/28/catalyst-fund-lessons-on-getting-early-stage-fintech-startups-investment-ready/">Cataylst Fund: Lessons on Getting Early-Stage Fintech Startups Investment-Ready</a>

<a href="https://cfi-blog.org/2017/07/31/how-financial-institutions-and-fintechs-are-partnering-for-inclusion-lessons-from-the-frontlines/">How Financial Institutions and Fintechs Are Partnering for Financial Inclusion: Lessons from the Frontlines</a>

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7 Fintech Trends to Watch in 2018

<em>The views expressed in this post don't necessarily reflect those of CFI.</em>

The Development Bank of Nigeria (DBN) was conceived in 2014 and this year it has come into fruition with the green light from the Federal Executive Council on April 5<sup>th</sup>. The only step standing in the way of disbursement of funds is the required approval from the National Assembly. With <a href="http://www.premiumtimesng.com/news/212461-nigeria-establishes-new-development-bank-1-3-billion.html">$1.3 billion</a> in its coffers, the new development bank aims to spur economic development by increasing access to finance for micro, small and medium-sized enterprises (MSMEs) through relatively lower interest rates compared to commercial banks, and relatively longer loan repayment periods.

The DBN will serve as a wholesale bank to microfinance banks (MfBs) which will in turn provide medium and long-term loans to MSMEs. It will provide loans to all sectors of the economy including manufacturing, the services sector, and other industries not currently served by existing development banks, thereby filling an important gap in the provision of finance to MSMEs.

A group of development banks are funding the DBN: the World Bank contributed $500 million, the African Development Bank with $450 million, German government-owned development bank KFW with $200 million, and $130 million from the French Development Agency. The bank’s goal for the first year of operation is to support 20,000 MSMEs.

Of course, MSMEs contribute significantly to national GDPs, whether it is a developed country like the United States, where they account for about <a href="https://www.oecd.org/unitedstates/united-states-improve-small-business-financing.pdf">50 percent of private sector employment</a> and create 46 percent of the private sector output, or a developing country like Nigeria where they are estimated to contribute 49 percent of the country’s GDP.

As invaluable as they are, however, access to funding for MSMEs has long been a global problem. In Nigeria, MSMEs receive only 5 percent of the country’s total bank lending. Challenges faced by Nigerian MSMEs, such as bias favoring large corporate borrowers and being regarded as high risk, highlight the need and importance of the creation of an MSME-focused development bank like the DBN. In Nigeria, MSMEs’ estimated unmet credit gap is <a href="http://www.worldbank.org/en/topic/financialsector/brief/smes-finance">50 to 60 percent.</a>

Despite the DBN’s potential to facilitate economic growth from the bottom-up and contribute to financial inclusion, it risks excluding certain essential stakeholders, according to Tiko Okoye, the CEO of <a href="http://smartcampaign.org/certification">Smart Certified</a> MfB <a href="http://www.smartcampaign.org/storage/documents/FORTIS0216_OUTPUT_SMART_FINAL_REPORT.pdf">Fortis Microfinance Bank</a>. <strong> </strong>

<a href="https://www.thisdaylive.com/index.php/2017/04/10/why-cbns-n220bn-msmes-devt-fund-recorded-low-patronage/">Mr. Okoye warns</a> against the DBN following in the same footsteps as the MSMEs Development Fund set up in 2013 by the Central Bank of Nigeria (CBN), which, similar in mission, channeled funds through microfinance institutions for on-lending to target customers. Mr. Okoye says the fund “was not accessed that much by microfinance banks because of the conditions attached to accessing the funds.” Mr. Okoye further expressed his frustration with the imposed conditions of the MSMEs Development Fund: “You expect me to lend to the grassroots who have virtually no collateral. Then, why ask me for collateral? Where am I going to get collateral from?” Mr. Okoye cautions that like the CBN MSME fund, “If the DBN asks us to bring bank guarantees, many MfBs may not to be able to access it.”

Other threats to the efficacy of the initiative, as cited by Mr. Okoye, include large scale corruption, policy inconsistency, and the lack of any representation from the MSME or microfinance sector on the DBN board, which is entirely made up of <a href="http://www.premiumtimesng.com/business/business-news/227530-nigerian-govt-unveils-management-board-members-new-development-bank.html">representatives</a> from commercial banks and other financial organizations.

Despite his criticisms, Mr. Okoye welcomes the initiative for its potential to bring down the cost of lending for clients whose loan interest rates remain around <a href="https://www.microfinancegateway.org/sites/default/files/publication_files/loan-pricing-survey_giz_nigeria.pdf">100 percent.</a> This is great news for clients in Nigeria who, as it stands, are not subject to interest rate caps.

The appointment of Anthony Okpanachi, former Deputy Managing Director of Ecobank Nigeria Limited, to lead and manage the DBN was also <a href="https://guardian.ng/appointments/stakeholders-laud-okpanachis-appointment-as-md-of-development-bank/">lauded by stakeholders</a> given Okpanachi’s track record of furthering inclusive finance in the country.

Development economists Janine Thorne and Charlotte du Toit analyzed the factors that contribute to a successful development bank in their paper, “<a href="http://www.tandfonline.com/doi/pdf/10.1080/03768350903303183">Marco-Framework for Successful Development Banks</a>.” They found that six inter-dependent dimensions of a successful development bank include:
<ul>
 	<li>An enabling environment absent a weak economy, high levels of corruption, and a limited political will to foster good governance;</li>
 	<li>Strict regulation and supervision that renounces inherent conflict of interest of the State in both ownership and the supervision of the bank;</li>
 	<li>A clear mandate which ensures it is correctly positioned within the environment and avoids mission drift and mission shrink;</li>
 	<li>The quality of governance and management in terms of a competent board, effective internal management, and efficient performance management;</li>
 	<li>Financial stability in terms of successfully managing funds; and</li>
 	<li>Proper performance assessment.</li>
</ul>
One other avenue for strengthening the path forward for the DBN would be to introduce a business incubation system, which Mr. Okoye noted, can reduce the failure rates of businesses. In addition, he proposed the DBN collaborate with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to help de-risk the sector by creating an SME credit guarantee scheme.

As exhibited by the practical advice already offered to the development bank from the MfB sector, having the voice of implicated stakeholders on the board of an initiative of this scale is crucial to its success. MfBs have traditionally been the vehicle through which the unbanked have been reached, and they’ve made significant strides in Nigeria increasing national financial inclusion rates and fostering economic development. The DBN should be a model for a vision of inclusion that it hopes to see within the Nigerian financial sector, as it would be in everyone’s best interest, including the bank itself.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/03/30/interest-rate-caps-in-nigeria-may-not-be-good-for-clients/">Interest Rate Caps in Nigeria May Not Be Good for Clients</a>

<a href="https://cfi-blog.org/2016/02/26/disability-inclusion-progress-in-india-ecuador-nigeria-and-elsewhere/">Disability Inclusion Progress – in India, Ecuador, Nigeria, and Elsewhere</a>

<a href="https://cfi-blog.org/2015/08/13/the-hold-up-with-mobile-money-in-nigeria/">The Hold-Up with Mobile Money in Nigeria</a>

Development Bank of Nigeria: As Inclusive As It Promises?

<em>&gt; Posted by Bobbi Gray, Research Director, Grameen Foundation</em>

[caption id="attachment_23392" align="aligncenter" width="615"]<img class="wp-image-23392" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/04/ffh_mexico_2008_ds_0188.jpg" alt="" width="615" height="410" /> We need to ensure products and services help family units, not just individuals, thrive.[/caption]

Writing in 1982, about Fred Astaire, Robert Thaves wrote "Sure he was great, but don't forget that <a href="https://en.wikipedia.org/wiki/Ginger_Rogers">Ginger Rogers</a> did everything he did, backwards…and in high heels." Since then, this quote about two legendary dancers has been used to celebrate the skills and talents of women and to demonstrate their ability to juggle complexity and pull it off gracefully.

At Grameen Foundation, we celebrate women for the potential they carry for ending poverty and hunger. In fact, some statistics suggest that if women farmers had the same resources as their male counterparts, the number of hungry people in the world could be reduced by 150 million. Beyond access to quality farm inputs, credit, and land, we also know that when women have equal access to education, health services, and business services they can thrive economically. Helping mothers be healthy before and during pregnancy also results in healthier children and more productive societies. Women are a key driving force against poverty.

But women carry a heavy burden. When both paid and unpaid work, such as household chores and caring for children, are taken into account, the <a href="https://unstats.un.org/unsd/gender/downloads/WorldsWomen2015_report.pdf">United Nations estimates</a> that women work longer hours than men—an average of 30 minutes a day longer in developed countries and 50 minutes in developing countries. A <a href="http://ow.ly/QAPp309Wltm">World Bank study</a> indicates that even if women farmers had improved access to agricultural resources, their farms may still face lower productivity than men’s, because of their more limited time for farm work and management. Likewise, Anne-Marie Slaughter, author of the book <a href="http://www.penguinrandomhouse.com/books/225053/unfinished-business-by-anne-marie-slaughter/9780812984972/"><em>Unfinished Business</em></a>, highlights one of the greatest challenges for women as they strive to close the pay gap with men: the trade-offs they face balancing the care of their children with economic productivity.

With these challenges in mind, we have examined the facilitators of and challenges for success in business for micro-entrepreneurial women. In <a href="https://www.freedomfromhunger.org/sites/default/files/PositiveDeviant__WomenEntrepreneurs_Mexico.pdf">Mexico</a>, we found that the women who were the most successful at their small business had older children or had a workable arrangement that allowed them to care for their children and their business. In <a href="https://www.freedomfromhunger.org/when-dreamers-become-leaders-understanding-spectrum-needs-among-women-entrepreneurs-guatemala">Guatemala,</a> this reality was similar. (In 2016, Grameen Foundation and Freedom from Hunger integrated under the Grameen banner. The work described here originated with Freedom from Hunger, and continues now with Grameen Foundation.)

While a woman’s desire to be an entrepreneur and her vision for her business—whether it is a small farm or a kiosk—are key drivers for her success, so too is her ability to balance work and family responsibilities. The number and age of her children help determine the amount of time she can spend on building a business.

Christy Stickney, a <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/762">Center for Financial Inclusion Fellow</a>, equally found work-life balance to be an issue in the research she conducted in <a href="http://www.centerforfinancialinclusion.org/storage/documents/Emerging_SMEs_FINAL_Eng.pdf">Peru, Ecuador, and the Dominican Republic</a> among micro and small business entrepreneurs. She found women were less likely to be high-growth entrepreneurs and often chose lower-growth enterprises, or played a supporting role or were joint owners of high growth businesses in order to <a href="https://cfi-blog.org/2017/02/24/why-women-in-smes-lean-out/">balance priorities held at home</a>.

Being a mother of three young children, this “truth” about the world hits home for me fairly often. The bandwidth needed to be successful at work and successful at home is tremendous. While I think we would all agree that we’re working hard to provide equal footing for women, we also have to be careful that: 1) we don’t create expectations that women can and should alone carry this burden of lifting their families and communities out of poverty; and 2) we set realistic expectations for what women with complex family lives and responsibilities can achieve.

Some globally common barriers to productivity for women are not going to fundamentally change until there are shifts in thinking and action among women and men, and society in general when it comes to “unpaid” family and household work. As Slaughter writes, this requires conversations and policy changes at many levels to create an environment where a woman can be a successful income earner and mother/caregiver at the same time.

In Burkina Faso, we’re currently testing out gender dialogues that encourage men and women to discuss how to share household responsibilities so that women can be more productive economically, on the farm and off.  So far, we’ve seen hundreds of men and women, including community leaders, show up for these community conversations and actively participate. Over the next couple of years, we’ll assess how these gender dialogues affect the women clients and their families.

While many women—myself included—would like to be Supermoms, and in crazy moments even attempt it backwards and in high heels, this also leads to exhaustion and disappointment when we confront the limitations of our own circumstances.  It is time to shift this conversation from what women can do to lift their families from poverty to how the family unit can work together to build a better future for itself, its community, and future generations. This requires shifts in the way we design our products and services to not just focus on individual women within the family, but on families themselves—as a team that works stronger, together.

<em>Image credit: Jim Cline for Freedom from Hunger</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/07/15/the-heart-and-science-of-client-assessment/">The Heart and Science of Client Assessment</a>

<a href="https://cfi-blog.org/2014/11/03/domestic-violence-and-microfinance-what-is-our-role-as-financial-service-providers/">Domestic Violence and Microfinance: What Is Our Role as Financial Service Providers?</a>

<a href="https://cfi-blog.org/2016/07/06/cash-or-credit-every-mothers-emergency-room-nightmare/">Cash or Credit? Every Mother's Emergency Room Nightmare</a>

Supermom and the Race to End Global Poverty

Accion is constantly inspired by small business owners we work with in the U.S., who have transformed their lives by starting, sustaining or growing a business. At the same time, we are increasingly aware of the importance of demonstrating through research the value of our investments in small business success (and the investments of government agencies, philanthropic organizations and corporations that make our work possible). In assessing this impact, we are confronted with the challenge of understanding the value of our services in helping entrepreneurs achieve a diversity of business and personal goals. Our research finds that while many small business owners in the U.S. are looking for growth, financial security and family financial health is sometimes just as important. These findings resonate with conclusions from recent <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/762">research</a> on Latin American small businesses by CFI Fellow Christy Stickney.

Through the Aspen Institute’s FIELD program and its microTracker initiative, we know that services provided by mission-based lenders lead to <a href="https://microtracker.org/explore/entrepreneur-data/">tangible outcomes</a> for U.S. small business owners one year after they receive a loan – including a 94 percent business survival rate, overall increase in average revenues and three jobs created or sustained on average per business. However, we have been limited in our study of the holistic, longer-term impacts of small business lending and business advising – particularly those impacts that cannot be captured through numbers alone. That’s why Accion and fellow mission-based lender <a href="http://www.opportunityfund.org/">Opportunity Fund</a> launched a first-of-its-kind, multi-year evaluation effort in 2015, which will inform the work of mission-based lenders across the country. This ongoing research is made possible through generous lead funding from the W.K. Kellogg Foundation and JPMorgan Chase &amp; Co., with additional support from S&amp;P Global.

In the first phase of research, we surveyed 571 Accion and Opportunity Fund borrowers, representing regionally-representative samples across 27 states, and completed in-depth interviews with 188 of them.

<strong>What We’ve Learned</strong>

<a href="http://us.accion.org/your-accion/small-business-lending-for-impact-advancing-insights-and-solutions">Preliminary findings</a> from this research indicate that our services have clear benefits to entrepreneurs. The majority said they had increased business sales (62 percent) and profit (55 percent) in the previous six months, and most said that their loans had a significant impact on these growth indicators. Out of the 76 percent of business owners with employees, about a third had hired additional workers in the previous six months. Nearly half of those who had hired more people said that their loan had a significant impact on their ability to do so. Entrepreneurs also had positive outlooks on the future: most projected increases in business sales (83 percent), business profit (81 percent), take-home pay (71 percent) and household savings (69 percent) over the next six months.

When asked to rate the impact of their loan on various aspects of their lives, business owners said that their loan has made the most impact on their confidence to achieve their goals and on their ability to improve their credit.  Many spoke of the discouraging effect of loan denials from traditional financial institutions, noting that an approval from Accion or Opportunity Fund helped them persevere. As one Chicago entrepreneur said, <strong>“Accion gave me hope to keep my dreams and goals alive and to continue on creating and giving back.”</strong>

A key theme that emerged in this research was the role that family plays in a small business owner’s personal goals. The top two personal goals for small business owners are related to family: “have more money to support my family” (91 percent) and “have more time to spend with my family” (83.5 percent). Entrepreneurs also spoke about their desire to create a legacy for their family – including making their children proud and handing down their business to them in the future.

Findings also suggest that entrepreneurs have diverse visions for the future of their businesses. For many entrepreneurs participating in the study, the desire for financial stability outweighed interests in business growth. About a third of participants had increased household savings in the previous six months and nearly 40 percent had increased their take-home pay.

<img class="aligncenter wp-image-23335" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/visions-for-the-future.jpg" alt="" width="615" height="274" />Most business owners (59 percent) said their loan helped them greatly in achieving their personal goals. For example, despite continuing to work long hours or have multiple jobs, many reported feeling more control and freedom as a result of their loan, affording more flexible schedules and greater autonomy in deciding how to balance work and family time.

<strong><img class="aligncenter wp-image-23336" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/stability.jpg" alt="" width="615" height="354" />What This Means for Mission-Based Lending</strong>

Through these preliminary findings, we know that services provided by mission-based lenders like Accion and Opportunity Fund help small business owners gain the financial stability and confidence they need to achieve their goals. However, these findings also underscore the fact that access to capital is just one element of a small business owner’s journey toward greater financial health. Most participants said they are not well prepared for a financial emergency, despite increases in their revenue and improvements in their financial management practices. These findings echo recent <a href="https://www.jpmorganchase.com/corporate/institute/insight-cash-is-king.htm">research</a> from the JPMorgan Chase Institute, which found that the typical small business only has 27 days of a cash buffer before it would be impossible to cover any expenses, operational or otherwise.

Over the next year, we will examine the longer-term impact of small business lending through additional interviews and borrower surveys. We will also explore new questions that were raised in the initial phase of research, including the challenges small business owners face in preparing for financial emergencies. We hope that findings related to this research will encourage productive dialogue and exploration among our peers and those who are invested in our work. Together, we can advance solutions that enhance the impact of mission-based lenders on small business owners, their families and their communities.

<a href="http://us.accion.org/your-accion/small-business-lending-for-impact-advancing-insights-and-solutions">Join us</a>! Review the preliminary findings and sign up for updates on research insights, learning opportunities and the final report.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/03/emerging-smes-secrets-to-growing-from-micro-to-small-enterprise/">Emerging SMEs: Secrets to from Micro to Small Enterprise</a>

<a href="https://cfi-blog.org/2016/05/02/in-the-united-states-gender-gaps-in-financial-literacy-and-pay-persist/">In the United States, Gender Gaps in Financial Literacy and Pay Persist</a>

<a href="https://cfi-blog.org/2017/03/06/a-u-s-agenda-for-global-financial-inclusion/">A U.S. Agenda for Global Financial Inclusion</a>

What Is the Impact of Mission-Based Lending?

<em>&gt; Posted by Christy Stickney, Independent Consultant and CFI Fellow</em>

<img class="alignright wp-image-23125" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/02/thumb_e052eadfe602459e9329a3ca817a1913.jpg" width="330" height="220" />Say the words ‘women’ and ‘entrepreneurship’ together and donors and philanthropists will rush to give you money. It’s one of the hot topics in development today.

But where are the women in small and medium enterprises (SMEs)? In my study with the Center for Financial Inclusion, <em><a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/762">Emerging SMEs: Secrets to Growth from Micro to Small Enterprise</a></em>, I asked this question, both directly and indirectly, as I met with entrepreneurs who had started microenterprises that grew to be SMEs, with the help of finance from microfinance banks in Peru, Ecuador and the Dominican Republic. I called these growth-oriented businesses emerging SMEs. These are my observations about women’s involvement with emerging SMEs.

<strong>Only a very small proportion of emerging SMEs are led by women. </strong>In my research only one of fourteen of the high growth enterprises identified in the study was led by a woman. Although the access-to-credit hurdle had been largely addressed within the study group, as evidenced by their extensive business borrowing, women were highly underrepresented as leaders of emerging SMEs.

<strong>Women tended to allow family responsibilities to shape their business roles and engagement levels.</strong> In particular, women entrepreneurs prioritized child-care responsibilities, as well as attending to ailing family members and aging parents.

<strong>Women were much more likely than men to diversify their economic ventures. </strong>Women tended not only to engage in multiple businesses, but also to invest in home improvements, rental properties, and the businesses and home-building endeavors of other family members. On the other hand, the emerging SMEs were characterized by single-focused dedication. Women’s business strategies appeared to aim toward creating value in family well-being and household equity and to reduce a family’s financial risk, benefitting both the family and the lending institution.

<strong>Women were very present as co-owners of emerging SMEs, occupying valuable support roles alongside male family members.</strong> In fact, the majority of high growth enterprises I encountered were jointly owned between an entrepreneur and his wife, or sister. In many cases the woman managed the business’s finances or handled customer relations while the man managed production. These roles align well with a woman’s need to be near the home, or attending to family responsibilities during certain hours of the day.

<strong>A few of the higher growth businesses had been started by women, and later transitioned to male leadership. </strong>In these cases, once the business reached a certain size, the owner’s husband or son joined her, and then carried the business forward into greater growth. One such example was that of Magda, who ran a small cafe just outside a university in Quito, Ecuador. When she was finally granted a coveted commercial site on the campus, her husband also joined her, providing much of the vision for the restaurant’s growth and future projections. “Siempre se necesita dos cabezas” (One always needs two minds.), he commented, referring to the virtues of their joint involvement in the business. Similarly, Francisco helped his wife set up a poultry-selling stand on a busy corner of their street in Guayaquil. However, once they moved off the street and into their own shop, which coincided with the arrival of their first child, he left his employment at a poultry farm to assume the leadership of their growing poultry-processing business.

Possibly, women entrepreneurs would feel greater freedom to engage more fully in growing their businesses if family care needs were being met by others. Such was the case of Esperanza, a small business owner who started a private school in her low-income neighborhood of Santo Domingo, in the Dominican Republic.  Esperanza was managing a staff of 12 teachers, and planning for an ambitious expansion of her school facilities. To support her, her mother ran the school cafeteria and cared for Esperanza’s two young kids.

So, what should we make of this? As women accommodate their business aspirations and involvement to their personal realities, do we also need to adjust? Should we recognize the value of the less dynamic businesses of women: to provide essential income to the family, allow women to make non-business contributions to family well-being and protect families against risk through diversification? Or do we push forward in ensuring that women entrepreneurs have the necessary institutional support to resolve their family care concerns, should they choose to pursue business growth?

Probably both!

We’d love to hear your thoughts. What do you think is the path forward?

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/07/14/rental-properties-a-popular-pension-plan-for-aging-entrepreneurs/">Rental Properties: A Popular Pension Plan for Aging Entrepreneurs?</a>

<a href="https://cfi-blog.org/2016/11/03/emerging-smes-secrets-to-growing-from-micro-to-small-enterprise/">Emerging SMEs: Secrets to Growing from Micro to Small Enterprise</a>

<a href="https://cfi-blog.org/2016/09/21/from-micro-to-small-business-whats-the-secret-sauce/">From Micro to Small Business: What’s the Secret Sauce?</a>

Why Women in SMEs Lean Out