Micro and Small Enterprises

From bustling open-air markets across Africa to family-run businesses in Asia and Latin America, Micro and Small Enterprises (MSEs) sustain livelihoods and foster inclusive growth. MSEs play a crucial role in driving economic growth and creating jobs in emerging markets and developing economies, making up nearly 90% of businesses and providing around 70% of employment opportunities.

Despite their economic importance, MSEs remain consistently underserved by financial institutions due to systemic credit barriers, limited digital access, and policies that often prioritize larger businesses. As a result, they face a persistent financing gap estimated at nearly $5 trillion. Many remain excluded from formal financial systems, particularly nano-enterprises and women-led businesses, which struggle with barriers such as limited credit histories, collateral requirements, and digital exclusion.   

However, with the right targeted solutions, there is potential that these barriers can be overcome. CGAP conducted a comprehensive analysis of the key dimensions of MSE finance. On the demand side, we highlight the unique challenges and opportunities faced by nano- and micro-enterprises, as well as women-led businesses, ensuring these diverse groups are not treated as a monolithic block but as unique enterprises with their own set of challenges and opportunities.

Simultaneously, on the supply side, CGAP evaluated a broad spectrum of financial providers from traditional microfinance institutions embracing digital transformation to innovative fintech disruptors deploying cutting-edge business models.