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FINANCIAL EDUCATION FOR THE MSMEs: IDENTIFYING MSME EDUCATIONAL NEEDS
INTRODUCTION Micro, Small and Medium Enterprises (MSMEs) are considered the lifeblood of an economy for many developing countries. They are frequently the drivers of innovation, employment, and sustainable economic development. Hence, to ensure sustainable development in emerging economies, it is important to create opportunities for MSMEs. Access to finance is frequently identified as a critical barrier to growth for MSMEs in emerging economies. According to a study by International Finance Corporation (IFC), the potential demand for MSME finance is estimated at USD 8.9 trillion, compared to the current credit supply of USD 3.7 trillion.1 Financial Service Providers (FSPs) are beginning to understand that MSMEs constitute a valuable market segment of their own and require financial products and services that meet their particular needs, and even within the MSME segment, different types of MSMEs (e.g. rural or urban, male or female-owned) have differing needs. These needs are distinctive from those of corporate clients, in the sense that their transaction sizes and numbers are smaller. They are also distinctive from retail clients as their transactions require more customization. This report aims to share with readers the various awareness and education-related issues that could hinder the economic growth of MSMEs. Specifically, FSPs do not have much information on the informal sector where many MSMEs do business. Also, most MSMEs do not have the opportunity to be educated on business management tools or have awareness of FSP products and services. Case studies for successful educational programs for both supply and demand-side from Zambia, Jordan and Bangladesh are elaborated in this report.
1 International Finance Corporation (2017): ‘MSME FINANCE GAP: Assessment of the Shortfalls and Opportunities in Financing Micro, Small and Medium Enterprises in Emerging Markets.’
