Who are the region’s high-growth women entrepreneurs and what motivates them? This study was commissioned by the MIF and produced by Ernst & Young. It analyzes the profiles, challenges and needs of high-growth women entrepreneurs in nine countries in the region. High-growth women entrepreneurs are defined as women entrepreneurs whose businesses have experienced growth rates of more than 20% for at least three years.

A Market And Credit Gap Assessment and IFC's Portfolio Gender BaselineWomen-owned small and medium enterprises (SMEs) make significant contributions to the economies in which they operate. However, female entrepreneurs face a range of financial and non-financial challenges in realizing their growth potential, and are more likely than their male counterparts to cite access to finance as a major or severe constraint on their business operations. In addition, financial institutions have not yet realized the business opportunities of meeting the specific financing needs of women entrepreneurs as a distinct customer group. One of the biggest barriers for increased access to finance for women-owned enterprises is the lack of reliable data disaggregated by gender: this further hinders the opportunity to make the business case to financial institutions on supporting women-owned enterprises. Commercial banks need to have a better understanding of the existing market potential as well as constraints facing women-owned SMEs—at a country and regional level—in order to design strategies and offerings that will allow them to better cater to the unmet financing needs of women entrepreneurs, and thus to profit from the commercial opportunities that this demographic presents.   

 Conventional SME finance policies are designed to address conventional constraints to SMEs accessing the financial services which they need to manage risks, meet supply orders, and invest in new technologies and market opportunities. Yet technology and innovative approaches are transforming the business of SME finance, mitigating conventional challenges and risks and in some cases presenting new risks. Continuing with only conventional policy responses may be duplicative and waste resources, and may also fail to address emerging risks.  This has important implications for the World Bank Group’s approach to SME Finance. Information asymmetry raises the costs and risks of providing financial services, and therefore reduces access and leads to higher pricing of financial services for many SMEs. Yet data availability is rapidly expanding, and data brokers are increasingly able to address information asymmetry.  

• “Big Data” Analytics - the analysis of alternative data sets such as cell phone histories and transactional data, represent new ways for assessing the creditworthiness of enterprises currently without access to finance. For example, Experian MicroAnalytics (global) and Cignifi (Brazil, Ghana, Mexico, US) deliver credit scoring based on airtime usage. This type of approach could open up access to credit for mobile payments customers in the developing world.  ZestFinance (US) combines data from thousands of potential credit variables, gleaned from alternative credit databases and web crawling to offer a ‘big data underwriting model’.

• With increasing technology and internet access, the expansion of “digital footprints” allow for alternative ways to assess borrower creditworthiness and spot and prevent identity fraud. For example DemystData (Hong Kong, US) and Lenddo (Colombia, Mexico, Philippines) use online reputation and social media analytics.

The lack of financing sources available to many SMEs, linked to constraints in the use of collateral and the availability of information, is cited as a major concern in the World Bank’s Enterprise Surveys. Typical policy responses include secured transactions frameworks (collateral laws, movable assets registries), credit lines, state banks, partial credit guarantee schemes, and encouraging competition and diversification.  Fast moving developments in the availability, timeliness, and use of data in supply chains, related to the electronification of transactions (payments, invoices, contracts), are opening up viable access to financial services for SMEs, including to factoring. So providing electronic platforms to facilitate on-line factoring and contract financing can be an alternative or complement to refinancing credit lines or support to state banks. Public sector procurement can be shifted to such platforms to efficiently open up access for SMEs, as is the case with Chile Compra for example. Electronic security and signature laws, and market facilitation platforms, can facilitate supply chain and factoring transactions with SMEs.    Crowd funding platforms can also ease access to finance constraints for SMEs, by providing more direct and efficient ways of accessing funding. They can offer borrowers cheaper loans and investors access to a new asset class. Examples of peer to peer lending platforms include Cumplo (Chile), which is web-based, and Funding Circle (UK), which has lent over $391 million to businesses from over 72,000 individual lenders. Alibaba-backed PPDai was the first online platform (social lending site) for peer to peer small unsecured loans in China. Improving SME financial skills and capability is traditionally seen as a matter of training and financial education, as well as the provision of clear and transparent information on financial products. As a complement to this, innovations in the provision of cheap (or free) and easy to access automated online financial advice can also be harnessed. A growing number of firms, such as Money On Toast (US), Vaamo (Germany), Your Wealth (UK), Yseop (France, UK, US) are using software to automate the production of financial advice. As online access improves in emerging markets, including through smartphones, this is an increasingly relevant tool globally. Implications for SME Finance Policy Frameworks: Innovative approaches do not replace the need for policy responses, but do mean that SME finance policies and initiatives need to be rethought. The concepts of additionality and leverage will be critical, based on a regularly updated diagnosis of gaps and priority needs. Emerging risks related to innovative approaches need to be addressed through SME finance policy frameworks. Regulatory frameworks may need to be updated to fit new providers and products, while supervisory capacity may need to be strengthened to effectively understand and monitor them. Credit reporting frameworks may need to be rethought, in terms of data accuracy and availability, new data brokers and providers to monitor, consumer protection, and how to apply or update data security and privacy standards.   The World Bank Group works with many governments and regulators to improve SME finance-related policies, regulations, initiatives, including through the Financial Inclusion Support Framework.  The WBG is therefore well placed to assist regulators and policymakers in harnessing technology and innovative approaches, and managing risks.  But to ensure our relevance and effectiveness, we need to also update our knowledgeand advice, and how we apply WBG financing instruments, accordingly. A G20 SME Conference will take place on 11-12 March 2014 in Riyadh, Saudi Arabia, organized by the Australian G20 Presidency and the Government of Saudi Arabia, at which I will present on this topic of harnessing technology and innovation in SME Finance Policy Frameworks.  We will post the resulting recommendations for G20 actions following this event. For further resources, please visit: The World Bank’s Financial Inclusion & Infrastructure website The SME Finance ForumThis blog was written by Douglas Pearce (Manager, Financial Inclusion and Infrastructure Practice, IFC), with contributions from Sarah Fathallah (Junior Professional Associate)

The GSMA Mobile Money for the Unbanked Programme (MMU) has been tracking the progress of the mobile money industry for the past few years. Each year, MMU’s State of the Industry Report contains key findings and insights on the growth of the sector.This year, for the first time, the scope of the report has been extended to include not only mobile money, but also mobile insurance, mobile credit and mobile savings.This report contains data from the MMU Deployment Tracker, which monitors the number of live and planned mobile money services for the unbanked across the globe. It also includes data from the MMU 2013 Global Adoption Survey of Mobile Financial Services (hereinafter the 2013 Global Survey), which had 110 participants from 56 countries. For some metrics, such as mobile money revenues, the amount of data reported is not as high as for the core metrics. Where it is sensible, estimates are made to complete the data set; in this report, numbers of mobile money accounts (both registered and active) have been estimated. We believe the findings in this report are truly representative of the industry overall.Mini case studies on mobile financial services as well as particular mobile money best practices have also been included in the report, where they help to support or deepen the insights from the survey.

Investment, particularly by the corporate sector in India, drove high growth rates during 2003-2009. Given the expected slow and weak recovery of the global economy, Indian corporates are unlikely to be able to lead the process of growth revival. This column argues that under the right circumstances and with proper policies, the dynamism of the Small and Medium Enterprises sector can ensure growth rates of 7% and above.