Why is Financial Inclusion important for enterprises?

Formal Micro, Small and Medium Enterprises (MSMEs) play a major role in economic development in emerging countries contributing up to 45 percent of employment and up to 33 percent of GDP; these numbers are significantly higher when taking into account the estimated contributions of MSMEs operating in the informal sector.

However access to financial services remains a key barrier to the development of MSME in emerging economies and if overcome, access can:
  • Help firms start up and expand their businesses
  • Upgrade production processes
  • Allow investment in human capital
  • Support the business through a period of crisis
  • Protect the business during unforeseen events (insurance)
  • Facilitate cash management and transactions
Given that most micro-enterprises in emerging markets employe family members, increased income for micro-entrepreneurs by expanding their businesses often benefits their entire family in terms of:
  • Better education
  • Improved nutrition
  • Increased access to health services