Ms. Lilavati Baral, a client of Accion’s partner Annapurna Finance, earns a living as a seamstress in a rural community in Odisha, India. She grew up with limited opportunities and never received a formal education. When she became a teenager, she taught herself how to use a sewing machine so she could begin working as a seamstress. Like many, she did not have the necessary paperwork or collateral to open a bank account at a commercial bank.
When she joined a solidarity microfinance group, Annapurna helped her access a business loan to meet her cash flow needs. As the pandemic negatively affected businesses and national lockdowns prevented people like Lilavati from attending group meetings in person, it became increasingly difficult for businesses and individuals to access finance. This was a major problem, especially when funds were needed to address emergencies. Annapurna was able to offer a near-instant emergency loan, known as a “just in time” (JIT) loan, to its existing 2 million clients, accessible via an SMS or WhatsApp message.
Digitally enabled financial products like the JIT loan can help more micro and small businesses like Lilavati’s build resilience in unpredictable times by expanding access to tools like credit, payments, insurance, and business management advice.
In November 2018, the Mastercard Impact Fund and Accion launched the MSE accelerator program (MAP) to support millions of underserved micro and small businesses around the world by digitally transforming their financial service providers (FSPs). The four-year program has sought to use digitalization and technology to enable better socioeconomic outcomes for micro and small businesses, including increased business growth and financial health. We have worked with a cohort of 47 fintechs and nine FSPs across Asia, Latin America, and Africa — helping them design innovative digital products, financial services, digital tools, and infrastructure to better serve the needs of 11.5 million micro and small businesses and individuals in the digital economy.
On average, our partners in this program more than quadrupled their number of monthly active digital users since joining the program. In many cases, growth in digital usage increased at a faster rate than growth in overall portfolio size, which indicating a significant portion of digital uptake is being driven by the digital transformation of existing customers. This growth is also accelerating, as unique monthly digital users across our FSP partners have increased more in the first 6 months of 2022 than in all of 2021.
From the program’s results, it’s clear that digitalization benefits FSPs and improves their processes, products, and programs. But at the start of this program, we were eager to understand if and how the digitalization of FSPs benefits their end users, micro and small businesses. How has digital usage improved the lives of microbusiness owners, their businesses, and their financial health? To answer these questions, we conducted a 12-month longitudinal study with a final sample of 2,179 micro and small business customers, from six of the nine program FSP partners across five countries, and surveyed both digital product users and non-digital product users within the program. Our research and findings aim to grow the body of existing industry knowledge with insights that explore what it takes to drive the transformation of micro and small businesses to help inform future digitalization initiatives.
Overall, we have seen that digital product users have reported both business growth and financial health improvements since the start of the program. We hope these findings serve to inspire others and establish some potential models for replication.
We are thankful for the partnerships we have forged during this program and hope these insights will lead to further digitalization programs that improve the lives of millions of individuals and small businesses around the world.
Vice President, Digital, Accion Global Advisory Solutions
Senior Vice President, Social Impact, International Markets, Mastercard Center for Inclusive Growth