Spotlight on Access to Finance for MSMEs

The Alliance for Financial Inclusion (AFI) and Bank Negara Malaysia (BNM) will be co-hosting four Member Trainings for AFI Members in 2017. The first of these trainings is being held in Sasana Kijang, Kuala Lumpur on 6-10 March 2017. The member training, themed Access to Finance for Micro, Small and Medium Enterprises is attended by 33 delegates from 19 countries and 21 institutions.

As recently reported by the International Labour Organization (ILO), small and medium enterprises create 67% of global employment, regardless of a country’s income level or size of its region. A focus on enhancing the capacity of financial regulators to support the growth of these enterprises is therefore pivotal to enhancing wealth creation in AFI Member countries and beyond.

This week’s five-day training in Sasana Kijang is a reflection of AFI and BNM’s continued commitment to provide a space for dialogue between AFI members to discuss the challenges in financing MSMEs and possible solutions to these challenges. Other topics that will be covered include the recent trends on MSME funding; the role of regulators in promoting access to finance in MSME funding; innovations to promote access to finance and support services to MSMEs; the gender aspect of access to finance for MSMEs; promoting infrastructure and support services to facilitate growth of MSMEs; and indicators that help track progress in the MSME sector.

The training was officiated by Thomas Tan Koon Peng, Director of Human Capital Development Centre, BNM on 6 March 2017. Mr. Tan highlighted the importance of the peer learning model in human capital development and expressed his pleasure in the continued partnership between AFI and BNM in delivering value to AFI Members.

This was followed by opening remarks from Mr. Norbert Mumba, Deputy Executive Director, AFI, who shared AFI’s vision to provide its members a platform to gain and exchange knowledge on financial inclusion policy, regulation and supervision. Mr. Mumba shared that this vision has been met with enthusiasm by AFI members, leading to an increased use of AFI’s capacity building services in 2016.

“We in AFI believe that smart financial inclusion policy can reduce inequality, contribute to overall sustainable economic development and stability. MSMEs play an important role in supporting a national economy and this is especially true of emerging economies.”

Access to finance has been a key challenge for MSMEs globally; largely due to the perception that they are risky and expensive to service. It is therefore critical for financial regulators to support MSMEs in finding ways to circumvent these challenges. This includes the exploration of innovative approaches such as the digitization of financial services. FinTech can play a significant role in reducing costs, mitigating fraud, and expanding a MSME’s ability to develop attractive products and services. Further, the financial policymakers can help enhance access to financing by connecting MSMEs to alternative lending avenues such as crowdfunding and peer-to-peer (P2P) lending platforms.

With speakers from the Financial Sector Deepening Trust, FinTech startup Crowdo, psychometric credit scoring platform EFL Global, investment matching platform IAP, as well as Malaysia’s Securities Commission, Credit Guarantee Corporation and Credit Bureau, this week’s training is expected to be an enriching experience that will further strengthen the capacity of AFI Members.