woman sitting at desk sewing Photo by Lorena Velasco - Colombia

Micro and Small Enterprises

Millions of low-income households in emerging markets rely on micro and small enterprises (MSEs) to pursue economic opportunity and build resilience. MSEs are very small, semi-formal businesses with few employees, facing a myriad of challenges that constrain their stability and growth, including access to relevant and affordable financing. The global unmet credit needs of MSEs remain persistently high at US$ 4.9 trillion. 

Traditional financial service providers find it expensive, risky, and complex to lend to MSEs due to their demand for small loan sizes, limited credit histories, insufficient or inaccurate data, and lack of collateral. 

However, technological advances and business model innovations are enabling a new type of providers – fintechs, to use alternative, digital data and underwrite loans, automate credit processes, and combine finance with non-financial services to achieve lower operating costs, improve risk assessment and enhance product offerings for MSEs. 

This comes at an opportune time since MSEs are also accelerating their embrace of digital technologies like social media, e-commerce platforms, digital invoicing, and digital modes of payments for their businesses, especially in the wake of the COVID-19 pandemic, positioning them to access newer and alternative sources of finance provided by fintechs. 

CGAP’s program on MSE Finance in the Digital Age explores the enabling role of digital finance in strengthening MSEs as a pathway to improved livelihoods. 

Latest Research


Empowering Small Giants: Inclusive Embedded Finance for Micro-retailers

Financial inclusion is becoming more feasible for many excluded and underserved micro-retailers, thanks to the emergence of new B2B e-commerce companies that are digitizing the final stage of the fast-moving consumer goods (FMCG) supply chain. This report outlines various business models that incorporate last-mile retailers into digital ordering platforms, offering them convenience, transparency, and a wide range of products.

Leveraging Transactional Data for Micro and Small Enterprise Lending

The use of transactional data for credit underwriting can play a part in closing the estimated US$4.9 trillion global financing gap for micro and small enterprises. This case study examines the data and experience of two fintechs in India that use different sets of transactional data for credit scoring.

Building Value in Microfinance Through Digitization: Lessons from Loan Automation Pilots

Digitization has brought both hope and frustration to the microfinance industry. To address this, we identified and tested five core principles for successful implementation. This focus note summarizes our experience, evaluates the validity of the five principles, and offers key lessons learned for other industry stakeholders to adopt and scale a similar approach.

Latest Blogs


Transforming Côte d'Ivoire's Cashew Sector with Phygital Empowerment

In Côte d’Ivoire, Wi-Agri empowers women farmers with digital tools and on-the-ground support. By understanding the challenges rural Ivorian women face, Wi-Agri is able to design for them rather than around them.

Navigating Compound Crises: Microfinance Learnings From Lebanon

Lebanon has faced a recent string of compounding crises, crippling GDP and decimating the Lebanese currency. Al Majmoua MFI survived the freefall and offers valuable insights into the diversity of measures that can be taken in the face of crisis.

BNPL in Nigeria: Emerging Fintech Innovations for MSEs

Findings from our recent research suggest BNPL is becoming a significant lending mechanism for Nigerians – especially for micro, small and medium enterprises and self-employed individuals who would not otherwise have access to credit.