In my final months before moving on from the GSMA to start-up Panoply Digital, I had been working closely with Ronda Zelezny-Green and Ernst & Young scoping out new areas of programmatic focus for M4D under the umbrella ‘Economic Inclusion’. The mandate was to identify innovative ways that technology could be used to enable inclusive and productive participation in the digital economy for micro and small enterprises (MSMEs). We looked at a number of opportunities and I have to give pats on the back all round, for what emerged was a solid market scoping of some exciting areas for potential market growth. Examples of some of the areas we looked at were solutions for Supply Chain Management; Marketing, Advertising and Communications; Labour Management (recruitment, reporting, salary payments, timekeeping, worker identity, verification and certification) and Access to Capital. Around that time, Deloitte released some interesting reports highlighting the potential opportunity and benefits for businesses – large and small; developed and developing – alike. Some of the greatest benefits being reductions in organisational costs and increases in productivity. The opportunity claimed to be large and relatively untapped. It was an exciting area to be pursuing – one I had hoped I would continue to gather interest – which is why I was so pleased to see the recent GSMA blog on Mobile Financial Services (MFS) for MSMEs!
The GSMA specifically hones in on the key opportunity highlighting the role that established MFS and mobile money products can play by bringing MSMEs into the formal market whilst driving the uptake of MFS in areas such as eCommerce, B2B Supplier Payments and Merchant Payments. As is the case for many individuals in developing markets, opening a mobile money account is the first time many MSMEs will ever use formal financial services and also represents a key step for them to join the formal economy. This opens up a channel for MSMEs to transact with others businesses in a more formal, digital economy. Additionally, the GSMA suggests that MFS could help to bridge the credit gap for MSMEs which, according to CGAP, is between USD 1.5 and 2.5 trillion in emerging markets by boosting access to credit services.
Beyond MFS, the World Bank recently called for submissions on innovative ideas or projects to support the growth of small and medium enterprises (SMEs). A vast majority of those submissions were indeed technology-based, for example:
- Improving Management Remotely Through Benchmarking and Tablet Feedback: A “technology extension” that relies on use of tablets to collect and store information on key indicators, benchmark the company against similar companies, and provide feedbacks remotely through the tablets.
- A Networking Marketplace for SME Development: An online networking marketplace where buyers and suppliers can openly exchange information and initiate business deals.
- SokoText: Leveraging mobile phones for economic empowerment of small enterprises and food security at the Base of the Pyramid: A technology-based solution that strengthens the position of these businesses through the creation of virtual buyer groups, enabling access to wholesale suppliers and lower prices, and better links these SMEs to existing supply chains.
Cost-effective access to markets, relevant and actionable information, and business-related services present challenges MSMEs. These barriers can affect the survival rates for budding enterprises as well as the ability for firms to realise their full potential. In the aforementioned scoping, our early stage analysis had suggested a conservative estimate that mobile tools could benefit 90m+ MSMEs in developing markets helping to boost survival rates by creating efficiencies that would keep costs down and revenues up. This number did not account for the wider use of technology for which the potential market and benefits could be innumerable.
Additional challenges exist due to the many MSMEs operating outside of the formal sector meaning governments have limited information about the factors that are driving economic activity across the country. This lack of performance information hamstrings governments from making sound policy decisions and can potentially impact growth. Kenya has taken some progressive strides towards streamlining the processes for business providing online registration with payment via mobile money; and the ability to perform a business name search via mobile.
In India, Vodafone Foundation in partnership with the Cherie Blair Foundation for Women and SEWA developed the RUDI project targeted specifically at women’s enterprises. The project helps women to grow their businesses by providing an SMS-based service that allows them to place orders. The project has so far helped more than 1,300 women to grow their business incomes – sometimes by up to 3 times – allowing for an increase in savings which is invested in pensions, education and helps to bring greater independence.
These are but a few examples which can be uncovered in this growing space. The thing I’ve always been most excited about when exploring this opportunity is that it brings together so many different ICT4D sectors under the one umbrella. It’s fairly well recognised that ICT4D solutions are most successful when they are not delivered in one isolated vertical and we have seen a convergence of different verticals in more recent years. Building a suite of services that bring together individuals, businesses and governments to provide solutions which enable an inclusive market will begin to create a truly digital economy.
I am biased given a) my previous work in this space, and b) the GSMA being my place of abode for seven years, but I believe the GSMA can take a leading role in the ICT4D sector in not only creating some buzz but importantly some action around service for MSMEs. I am thrilled to see this back on the agenda and look forward to more from the Mobile Money team – especially given all their previous success and excellent work they do!
 Unfortunately I left the GSMA before we were able to further research this number so it is indicative only (and now outdated!).