• What we do
  • The People
  • About Us
  • Why Innovation Africa
  • Contact Us
Innovation AfricaCreating the Future Today
  • Feature Articles
  • Innovation
  • Agriculture
  • ICT
  • Technology
  • Entrepreneurship
  • Health
  • Store
  • Contact Us
Menu
  • Feature Articles
  • Innovation
  • Agriculture
  • ICT
  • Technology
  • Entrepreneurship
  • Health
  • Store
  • Contact Us
  • Rethinking SME Finance Policy – harnessing technology and innovation

    March 12, 2014 Editor 0

    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.

    Go to Source

    Related Posts

    • Technology Questions Every CMO Must AskTechnology Questions Every CMO Must Ask
    • The Vital Entrepreneurial Learning Organization: A Corporate Mindset for Entrepreneurial Change ManagementThe Vital Entrepreneurial Learning Organization: A Corporate Mindset for Entrepreneurial Change Management
    • 7 African Mobile Phone Service Tariffs and Bundles7 African Mobile Phone Service Tariffs and Bundles
    • Why Is an App Worth as Much as a Small Oil Field?Why Is an App Worth as Much as a Small Oil Field?
    • Commercializing public research: One of the core subjects of the Innovation Policy PlatformCommercializing public research: One of the core subjects of the Innovation Policy Platform
    • Lowering Barriers to High Speed Internet in the Arab WorldLowering Barriers to High Speed Internet in the Arab World
    Sovrn
    Share

    Categories: World Bank PSD

    Tags: Business_Finance, Financial economics, SME finance, Technology_Internet

    Africa: Sharing Data to Improve Humanitarian Aid Bioprinters: Printing a bit of me

    Leave a Reply Cancel reply

    You must be logged in to post a comment.

Subscribe to our stories


 

Recent Posts

  • Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises December 30, 2021
  • The Strategic Role of Design in Driving Digital Innovation June 10, 2021
  • Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control June 10, 2021
  • BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems June 9, 2021
  • COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa June 9, 2021

Categories

Archives

Popular Post-All time

  • A review on biomass-based... 1k views
  • Can blockchain disrupt ge... 795 views
  • Apply Now: $500,000 for Y... 791 views
  • Test Your Value Propositi... 748 views
  • Prize-winning projects pr... 721 views

Recent Posts

  • Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises
  • The Strategic Role of Design in Driving Digital Innovation
  • Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control
  • BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems
  • COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa
  • Explicit knowledge networks and their relationship with productivity in SMEs
  • Intellectual property issues in artificial intelligence: specific reference to the service sector
  • Africa RISING publishes a livestock feed and forage production manual for Ethiopia
  • Transforming crop residues into a precious feed resource for small ruminants in northern Ghana
  • Photo report: West Africa project partners cap off 2020 with farmers field day events in Northern Ghana and Southern Mali

Tag Cloud

    africa African Agriculture Business Business model Business_Finance Company Crowdsourcing data Development East Africa economics Education Entrepreneur entrepreneurs Entrepreneurship ethiopia ghana Health_Medical_Pharma ict Information technology Innovation kenya knowledge Knowledge Management Leadership marketing mobile Mobile phone nigeria Open innovation Organization Research rwanda science Science and technology studies social enterprise social entrepreneurship south africa Strategic management strategy tanzania Technology Technology_Internet uganda

Categories

Archives

  • A review on biomass-based hydrogen production for renewable energy supply 1k views
  • Can blockchain disrupt gender inequality? 795 views
  • Apply Now: $500,000 for Your Big Data Innovations in Agriculture 791 views
  • Test Your Value Proposition: Supercharge Lean Startup and CustDev Principles 748 views
  • Prize-winning projects promote healthier eating, smarter crop investments 721 views

Copyright © 2005-2020 Innovation Africa Theme created by PWT. Powered by WordPress.org