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Summit ‘24 Insights: Best-in-Class Strategies for Growing WMSME Portfolios

Thursday 27th June 2024

Growing the women micro, small and medium enterprises (WMSMEs) portfolio requires a strong commitment to building their businesses and enhancing their appetite for leverage, as well as adapting operational policies and processes to reduce access barriers. The Alliance’s most recent Female Economy Analytics Survey (FEAS) proved that the holistic value proposition offered by members–access to finance, information, financial and business education, networks and recognition–works. Women’s share of loan volume in the SME segment recorded a 16% compound annual growth rate between 2020 and 2022, compared to 4% in the retail segment. 

Three key takeaways from among the best-in-class strategies shared at the 2024 Annual Summit:

1. Cash-flow based lending is a basic plank of any bank strategy to increase lending to WMSMEs. Banco Nacional in Costa Rica, which has an SME client base that is 80% informal or semi-formal, and KCB Bank in Kenya with similar, both shared how cash-flow based lending models have enabled them to reach WMSMEs who lack the collateral and financial statements typically required by banks. Key to achieving this has been building credit officers’ capability to construct client financial statements, including a 6-to-12-month projected cashflow based on business and family dynamics. This high touch approach is complemented by scoring models and use of mobile digital devices to increase efficiencies. The results are impressive—KCB now finances 500,000 WMSMEs, with a non-performing loan rate of less than 5%, while providing collateral-free loans up to $30,000 USD.

2. Financing WMSMEs in the green transition requires strong measurement, staff education and affordable solutions. Women are more likely than men to want to invest in ESG and also more likely to be impacted by climate risks, yet just 0.01% of climate investing globally supports projects which address both climate and gender issues. NatWest shared how they are applying the capabilities they’d developed to deliver to women’s markets to now support customers to build their resilience to climate risks. Those elements included ensuring the CEO champions the approach, educating staff, tailoring the customer value proposition, and supporting customers to understand their current footprint and how to get to net-zero through their climate tracker. ProCredit’s approach involves similar elements but with an emphasis on building the strong technical capability of the front line to act as advisors and truly manage resistance and offer affordable, valuable solutions to SMEs. Gprnt.ai also shared their incredible ESG reporting system enabling banks to track and meet their Scope 3 targets. 

3. From basic financial literacy to gender intelligent advisory services, non-financial service (NFS) must be tailored to market and segment needs. HBL, Pakistan begins with basic financial literacy for informal MSMEs while providing mentorship for more established businesses. It also provides bespoke NFS for distinct sectors, for example, access to storage space for Agri-businesses. In Canada, ATB launched its women in business proposition in 2023, and has increased its share of women-led businesses in its SME portfolio from 8% to 18% in just two years. Educating staff was key, with the bank institutionalizing a Women in Business accreditation program for staff (modeled on NatWest’s by whom it was mentored), teaching staff how to communicate to women, gender intelligent design and bias training. This enabled a ramp up of gender-intelligent advisory services for WMSMEs, communicating the brand’s commitment to female entrepreneurs at every level. BRAC Bank, Bangladesh spoke to the customer loyalty if women are treated well, with Khadija Mariam stating, “If we can satisfy a women entrepreneur, she’ll remain at our bank for years. NFS is a proven approach for us. If we can help her identify a proper market and channel, it’ll help her business and develop her in terms of capacity for business.” 

Watch the Summit panels: 

  1. Innovations in Debt Finance
  2. Enabling Women to Mitigate and Adapt to Climate Change
  3. Must-Have Non-Financial Services for WMSMEs