After my internship at ANZ Grindlays Bank in 1999, I joined BRAC as Management Trainee. Later in the year, I moved to BRAC Bank. I was among the first employees of the bank and was privileged to experience the formation of a bank, with a unique vision and concept of serving the Small and Medium Enterprises (SME). Later, I worked in various roles including Corporate Relationship Manager, Head of Marketing and Product Development and Head of Cards before joining IDLC Finance Limited as the Head of SME in 2008.

Women's entrepreneurship has hit a media tipping point. The question is: Is it just a passing media fad that will soon be a blip on the radar screen, or is it actually a real, fundamental economic force that's reshaping the world? I think it's safe to say that it's the latter. Women-owned entities in the formal sector represent approximately 37% of enterprises globally — a market worthy of attention by businesses and policy makers alike. 

As women entrepreneurs grow their enterprises, research has shown that they are less likely to seek and obtain equity investments, either from angel or venture capital investors. Some say women are less growth-oriented, some say their network ties don’t include the sources of referrals that are so important in this arena, and others point to a lack of interest or a bias in the equity capital community.

To reduce asymmetric information problems associated with extending credit and increase the chances of loan repayment, banks typically require collateral from their borrowers. Movable assets often account for most of the capital stock of private firms and comprise an especially large share for micro, small, and medium-size enterprises. Hence, movable assets are the main type of collateral that firms, especially those in developing countries, can pledge to obtain bank financing. While a sound legal and regulatory framework is essential to allow movable assets to be used as collateral, without a well-functioning registry for movable assets, even the best secured transactions laws could be ineffective or even useless.

With this publication, American Express OPEN provides stakeholders in the women’s enterprise development community with an up-to-date accounting of the state of women-owned businesses in the United States in 2012, building upon the great interest and success of its inaugural effort in 2011.

Last week in Istanbul I attended a really interesting meeting of a number of IFC clients dubbed "Brick by Brick:  Achieving Scale in Extending Technology Enabled Access to Finance".  The main purpose of the event was for IFC's clients to learn from each other, and the agenda was dominated by their presentations of their initiatives...for me, it was an eye-opening update of how far we've come in what technology can do, and how much is relevant to SME Finance.  We will try to make as many of the presentations as possible available through the Forum (we are just checking with the authors on this), but here are some previews of what I hope will be coming:How Bank South Pacific goes into the small farmer supply chain through tablets, cards and F-Pos...How just when you thought nothing could go below micro-finance Tiaxa brings "nano-credit" to the market!  and what it might mean for SMEs.How TEB Bank (Turkey), already profiled here for non-financial services for SMEs, also innovates in the electronic payments space, vital to continued market share in their competitive market.and more...overall I came away amazed at how many new wrinkles are being tried, and how some things of which I was a bit less certain, like crowdfunding, already are driving ahead in emerging markets. more to follow soon...for now , check out http://www.tiaxa.com/about-us/who-we-are-and-what-we-do/ - I know what they're doing now is not SME, but this "nano-finance" could take on a whole new potential if combined with a way to connect the data not to phone numbers only, but also to real peoples' IDs...matt

While women across the developing world thrive thanks to microfinance—small loans that beget small, though often profitable ventures—Kelly Yohannes dreamed on a larger scale. She wanted to build an upscale, environmentally friendly hotel in Ethiopia, where she lives.But for that, she needed a large amount of financing from her local bank. It did not take long for Yohannes, a widow who had shared her hotel dream with her late husband, to realize that women like her face extreme difficulties accessing financing.

Rachel Freeman, IFC manager for Access to Finance Advisory Services in East Asia Pacific shared how movables lending could help resolve banks’ non-performing loans and expand financing to small and medium enterprises on the sideline of the international symposium on movables lending organized by IFC and the Vietnamese Banking Association on August 22-23 in Ho Chi Minh City.

In this article, Stephanie Marton, Associate Consultant at the Boston Consulting Group, presents a practical and strategical perspective to approach Gender-Lens Investment. Distinguishing the philanthropic cause of gender equality from pure market opportunities, Stephanie emphasizes that the message of gender-lens investing needs to be reframed in order to attract larger funding pools to sustain this new field of investment.

MSME is a term which covers a very wide range of businesses—from micro, the first ‘M’, to medium, the second ‘M’, with S(mall) in the middle. They share two things in common in developing markets:

• The first is the essential role they play in terms of local employment (up to 45%) and contribution to both Gross Domestic Product and Gross National Product. (“D” is location of production; “N” is ownership. MSMEs can account for up to two-thirds of GDP/GNP in some of the emerging countries.) Strong MSMEs mean a growing economy and more jobs.
• The second is a dearth of readily available and affordable financing. In some areas, almost two-thirds of all such enterprises lack sufficient capital and access to finance, according to an IFC-McKinsey report.

The middle is always easy to overlook. Multinationals and established businesses seeking to enter emerging markets have no difficulty obtaining favourable loans, tax holidays, and beneficial foreign-exchange agreements. Most readers of this blog are also well aware of the micro-credit and funding options available to capable low-income individuals who hope to establish tiny enterprises and the success stories that require more capital to expand and diversify. This takes them into the MSME domain, which is also referred to as the missing-middle because financial products and delivery channels have not evolved for this segment.

MSMEs with less impressive balance sheets still need capital to survive. These are not an unlucky few; they comprise an estimated 365-445 million units (considering the informal enterprises, the numbers increase substantially to 900-950 million), and up to 60% of local businesses in Southeast Asia and Sub-Saharan Africa. The total unmet need for small-business credit in the formal and informal, emerging market sectors ranges from $2.1-2.5 trillion, according to a recent McKinsey report, “Two trillion and counting”.

This is a lot of money, in fact approximately the same amount the UN estimates global natural disasters have cost governments, banks, insurance companies, and individuals since 2000. The reason governments and insurance/re-insurance providers in particular might want to note the correlation is that less developed countries are invariably the most vulnerable to drought, famine, floods, earthquakes, and other disasters that will only increase with climate change.

Successful small businesses help ravaged landscapes recover more quickly and effectively. And in the aftermath of the global financial crisis, which many of the weaker emerging markets are still struggling with, the role of small businesses becomes even more important to the local economy and job creation. If two-thirds of MSMEs are already strapped for cash, however, reconstruction in both scenarios will take a lot longer and the poorest segments of the population will suffer even more.

Both banks and MFIs are coming to understand that strong MSMEs are in fact essential to economic growth and stability. Nevertheless, the key question that remains for both is, what’s necessary and how difficult is it for banks to downscale and MFIs to upscale to serve MSME segments?

Issues they must both address are:

• MFIs have traditionally served the low-income customers under the group-lending model. This model fails to address the credit needs of MSMEs.
• Microfinance institutions have also had their fair share of bad publicity and problems with individual loans in recent years. Trust may be an issue for some MSME clients. (For in-depth analysis on this topic, please see MicroSave's research papers and related materials).
• Banks, in turn, rely on collateral for their lending model. Most perceive MSMEs with no/low attachable assets as too high a credit risk.
• To change, and to support MSMEs, banks will need new credit assessment and risk methodologies, new training for their staff, new marketing, and better “last mile” connections and availability for remote MSME customers.

Neither banks nor MFIs are known for their nimble ability to adapt and change. It will take time for MFIs to expand both their credit assessment and their credit offerings to better fit small enterprises. Banks will need to rethink how loans to micro and small businesses can work without hard collateral guarantees and in remote areas their branches do not usually serve.

The rewards will still outweigh the risks in most cases. Financial inclusion does not just mean more individuals with more active bank accounts. It means a flourishing economy with formal banking and loan services for even the very poor and the very small business enterprise.