Fintech for SME financing in Africa

SME financing has often been described as the missing middle piece of finance as SMEs are less likely to obtain financing than larger corporates or even micro borrowers. This problem is not new and yet it is still the big elephant in the room as SMEs are the backbone of African economies, accounting for about 80 – 90 per cent of businesses and providing approximately 60 per cent of employment. The total financing gap is estimated to be about USD 330 billion. At the same time, fintech has led to dramatic innovation and disruption in banking and financial services in both
developed and developing markets. This research will analyse as a first step current processes and the state of digitalization of three African SME lenders. As a second step it will focus on the question to what degree a greater focus on fintech and digitalization can help African SME lenders to (a) provide better products and more efficient services to their clients, (b) better manage risks, (c) increase outreach and (d) on that basis attract more equity and debt funding for themselves. The research thus seeks to make a contribution to finding ways of closing the massive SME
financing gap.