Topic 2: The Interplay between financial and non-financial services

A sustainable MSME ecosystem must supply a wide range of financial services (debt, equity, payment services, etc.) and non-financial services (capacity building, specialized knowledge, advisory services, etc.) as each MSME progresses through the lifecycle of a company. MSMEs have limited access to training, to business networks and to role models. This impacts both the supply of bankable MSMEs as well as the demand for formal financing. Providing non-financial services to MSMEs can improve the viability of lending by making the MSME better governed and/or more competitive.

Banks are increasingly interested to serve smaller MSMEs but consistently find that these new clients require more capacity building and business development services to be viable borrowers.  This track explores how Business Development Services (BDS) providers and Banks can potentially develop coordinated and complimentary services to serve the needs of MSMEs.

CONTEXT / FOCUS

For the purposes of this exercise, we ask participants to focus on a subset of enterprises within SMEs.  The graphic at right provides a theoretical structure for defining the target SMEs. The target companies (segment D) are big enough that they’re outgrowing the focus of microfinance providers, but they’re not large enough to meet the expectations that most banks have toward their commercial clients.  They may lack computer-based records, and the leader(s) are often simultaneously filling multiple management and operational roles. Our target firms are the middle of the MSME size range, and they are viable businesses and have the capacity to operate sustainably.


OPPORTUNITY

Coordination and partnership between Banks and BDS/NFS/Capacity Building Providers help build an effective ecosystem to provide enterprises with the financial and capacity building services and promote market-driven solutions that will sustain a local advisory services industry that can be weaned off donor support.

KEY QUESTION / CHALLENGE

What must be true for stakeholders (banks, BDS/NFS providers, and donors) to effectively coordinate to create a sustainable ecosystem to serve the needs of SMEs?

Knowledge Gifts

The following Knowledge Gifts will be presented during the Practitioners' Exchange:

Sub-Topics

  1. What are examples of coordinated solutions working in the market where stakeholders have effectively provided integrated services?
  2. What is the structure and what are the various roles of stakeholders to create a sustainable market for MSMEs to access BDS and finance?
  3. What innovations exist and how are we seeing NFS evolving in terms of effectiveness, cost reduction, and scale?
  4. How can we measure impact/results in ways that are valuable for all stakeholders?
  5. Are there shared performance indicators for MSMEs that can assist stakeholders in coordinating services?

Topic Hosts

Joanna Romero - International Finance Corporation (IFC)

Joanna Romero is Global Non-Financial Services Specialist in SME Banking and Banking on Women based in Washington, DC. Over the last eight years, she advised banks across Asia, Mid-East and Sub-Saharan Africa on a variety of topics in SME banking including non-financial services as well as strategy, segmentation, customer value proposition and sales effectiveness. Her most recent clients include key players in the banking sectors of Bangladesh, Cambodia, China, Indonesia, Laos, Mongolia, Sri Lanka, Vietnam and Zimbabwe. Prior to her current role, Joanna was Regional SME Banking and Gender Finance Specialist based in Ho Chi Minh City, Vietnam. Before joining IFC, Joanna worked in management consulting and private sector development focused on SMEs in Asia and Europe. She has a Master’s degree in International Trade and Investment Policy with a concentration on Finance from The George Washington University in Washington, DC.

Evangelia Tsiftsi - International Finance Corporation (IFC)

Vally is a multidisciplinary Communications and Marketing Specialist based in Washington, DC. Over the last two years, she has been leading the communications and go to market strategy for IFC’s new SME capacity building programs, including certifications, a digital learning platform and IFC’s Principles for Performance and Learning Professionals publication. Before joining IFC, Vally worked in corporate communications for global FTSE 500 companies in London and New York, whose products and services span across different industries including clean energy, technology, and health. She has a master’s degree in Finance & Economics from The University of Southampton and a master’s degree in Marketing from The University of Manchester, UK.


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