“In the last 10 years in existence, the Alliance for Financial Inclusion (AFI) network has been maturing. We’re now at a stage where the network feels confident in sharing proven knowledge with others — to replicate initiatives that have been implemented across the network, in other member institutions, other countries,” emphasized AFI Executive Director, Dr. Alfred Hannig during his opening remarks at the high-level, Joint Learning Programme (JLP), Building an Inclusive MSME Financing Ecosystem.

The JLP is co-hosted by Bank Negara Malaysia (BNM) in collaboration with AFI from 9-13 April, 2018 in Kuala Lumpur. Gathering more than 20 high-level representatives from over 13 countries — led by over 10 Governors and Deputy Governors combined, from emerging economies — this special JLP is the first of its kind under the AFI Capacity Building initiative that looks at all aspects of the SME financing ecosystem, and connects the highest level of regulators with implementers and end users — a complete cycle.

In the past decade, the AFI network has grown tremendously in terms of the commitments made to promote financial inclusion, the number of issues worked on and policy changes the network has brought about together. As a result of its commitment to retain the quality of peer learning trainings, AFI follows a comprehensive approach to capacity building. Every year, AFI conducts the Member Needs Assessment (MNA) allowing participants to consistently provide feedback on how they have used the learnings in advancing policy changes; MSME finance was ranked as one of the top three policy areas, by the AFI network.

Dr. Alfred Hannig highlighted that “in AFI’s current strategic framework, capacity building is a very important pillar that focuses on these strategic qualities: content and implementation,” helping AFI in transitioning into a policy leadership role.

“Micro, Small, Medium Enterprise (MSME) financing is a key pillar in National Financial Inclusion Strategies (NFIS); in 2016, 20 policy reforms undertaken by AFI members were in the area of MSME. The contribution of MSMEs is significant to promote financial inclusion especially in emerging economies,” he added.

MSME contributes directly to income generation and economic development, and thus poverty reduction, which is the number one Sustainable Development Goal (SGD). The SME Finance Forum highlights that SMEs account for 9 out of 10 businesses, contributing up to half of the GDP and supporting two-thirds of jobs globally. Promotion of MSME is most often one of the key pillars for any national financial inclusion strategy. Therefore, creating an enabling environment for MSMEs to thrive becomes a prerequisite for promoting financial inclusion.

Although the importance of the sector is accepted, access to finance is a common challenge faced by MSMEs globally. Based on a research conducted by SME Finance Forum, 65 million or 40 percent of formal MSMEs in developing countries have unmet financing needs. The gap is estimated to be $5.2 trillion, which is 1.4 times the current level of MSME lending. In MSMEs, women-owned businesses comprise of 28 percent, and account for 32 percent of the MSME finance gap.

“Smart polices can go a long way in addressing the challenges of financing MSMEs,” conveyed Dr. Alfred Hannig at the opening of the high-level JLP earlier today. In the coming week, participants will walkthrough intense learnings of building an inclusive MSME financing ecosystem.