The Fintech option
Across the continent, SMEs represent nearly 90% of the entrepreneurial fabric and around 60% of formal jobs...But they face a serious problem of access to financing to which Fintechs could provide solutions.
By Oumar Fedior
The potential of SMEs in Africa is real. Their difficulties too. Among them, the most nagging is undoubtedly that linked to financing. The needs are estimated at several hundred billion dollars. But despite the many initiatives, the problem has remained almost intact. Moussa Cissé is a Fintech manager. According to him, salvation can only come through Fintechs which have already shown a glimpse of what they can bring if put in an appropriate framework.
He indicates for example that “mobile solutions have contributed significantly to financial inclusion on the continent by doubling the banking penetration rate to 40%.
According to an Osiris rapport (Senegalese structure dedicated to digital) we reviewed, Fintechs were able to raise $836 million in one year. A windfall and expertise that can easily benefit SMEs, believes our interlocutor. The specialists are unanimous : “Africa’s development in the digital space depends on the growth of entrepreneurship that leverages digital technologies to market through innovation.” Oumar Dia exécutive at the agency for the development of Smes in Senegal and west Africa is optimistic. According to him, the many digital innovations that are emerging can transform the financing mechanisms of SMEs. “They are more flexible and better adapted to the characteristics of SMEs, most of which are in the informal sector.
Traditional financial institutions struggle to finance SMEs precisely because they have neither reliable data nor accounting expertise.”
Digital innovation at the heart
Today and for several years now, the digital revolution has started to drive new models around mobile money and Fintechs. The advantage, explains this Fintech specialist, is that digital innovations, through the innovative business models they enable, provide disruptive solutions to these problems. Beyond Fintechs, he believes, it is digital itself that brings important innovations. He cites the example of crowdlending, increasingly used as an alternative. He believes that digital technology can bring significant changes. “Most often it is actors from the same space who work there. But with digital, the palette can be wider. And that again is the business of Fintechs if we look at it more closely,” Oumar Dia believes.
Nearly 40% of the credits granted by M-Shwari would be to micro-enterprises
In a contribution, Aiaze Mitha, Digital Entrepreneur, spoke about the many possibilities offered by Fintechs to the issue of financing SMEs. According to him, sales force digitization tools allow financial institutions to increase the performance of their loan officers, by automating the collection of information in the field from forms operated using tablets, thus reducing the cost customer acquisition.
For example, it reveals that the use of these solutions in Kenya increased the productivity of loan officers by almost 68%.
“This is also the case for M-Shwari, the digital credit platform launched by mobile payments provider M-Pesa. According to estimates made by the Amarante Consulting firm, almost 40% of the loans granted by M-Shwari would be to micro-enterprises,” he said. Not without indicating that these are existing platforms which may well be useful to SMEs.
Alternative to the lack of reliable information
It has been said and repeated, one of the main reasons for the problem of access to financing for SMEs is the lack of reliable information. A constraint that Fintechs have managed to circumvent or at least improve. By collecting data, explains Bachir Déme, financier, certain Fintechs specializing in credit scoring collect thousands of data points relating to mobile payments made by SMEs. Ultimately, he says, this makes credit analysis possible in the absence of traditional information. Which consequently makes access to financing flexible.
