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Micro, Small and Medium Enterprises (MSMEs) face several challenges when trying to expand, especially in accessing adequate funds to finance their operations and growth, but their credit worthiness can now be assessed by exploring alternative data, the World Bank has said.
Estimated at 37 million, Nigerian MSMEs are said to have a finance gap of $158.13 billion, data compiled from the 2017 MSMEs report by the World Bank and Finance Forum with the title: MSME FINANCE GAP- Assessment of the Shortfalls and Opportunities in Financing Micro, Small and Medium Enterprises in Emerging Markets, show.
The Washington-based financial institution says that MSMEs play a huge role in facilitating economic development due to their flexibility and affinity to innovation, “even more so in emerging economies with a high contribution from the informal sector.”
“Access to credit for MSMEs and individuals can be enhanced and expanded by promoting the use of alternative data in credit reporting,” World Bank said.
Out of the total 162 million formal micro, MSMEs in developing countries, of which 141 million are micro-enterprises, and 21 million are SMEs, Nigeria accounts for one of the countries with the highest number of MSMEs.
“Three countries – Brazil, China and Nigeria; contribute 67 percent to the total number of MSMEs, which is equivalent to 109 million enterprises. There are close to 12 million SMEs in China alone, which represents 56 percent of all SMEs in developing countries,” World Bank noted.
World Bank’s claim on the use of alternative data in assessing credit worthiness of MSMEs can be affirmed by the 2016 report by Global Partnership for Financial Inclusion (GPFI) as it said in its G20 publication that it encourages service providers to use multiple sources of digital data for evaluating consumer and small and medium enterprise (SME) … Read More...