The creation of our Digital MSME Finance Course – Behind the Scenes with Elizabeth Friend

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Author: Nwabisa Mazana

Elizabeth Friend is a Managing Director at The Small-Scale Sustainable Infrastructure Development Fund (S3IDF). She is also a Sustainable International Development Practitioner and Organisational Strategist with a focus on developing, implementing, and evaluating market-based solutions to poverty, concentrating on small-scale enterprises and social impact start-ups.

Her support of Micro, Small and Medium Enterprises has been focused on helping them overcome barriers and secure financing and other support. Through her experience, she has been fortunate to work with a range of stakeholders, including banks, governments, international development institutions, academics, nonprofit organisations, community-based groups, technology providers, and entrepreneurs.

This work has made Elizabeth realize that Digital finance has the potential to make financial and related services accessible and affordable to MSMEs. Elizabeth states that MSMEs are the true drivers of the global economy and innovation, accounting for 90% of new jobs and 50% of employment worldwide. Fostering additional MSME creation and expansion is essential to meet workforce growth and sustain the global economy thus the creation of the Digital MSME Finance Course.

We would love to know more about you. Could you tell us more about your career history and where you are today?

I started my career working directly with micro- and small enterprises (MSEs), most of which were unregistered and operating informally and did so for over a decade before transitioning into work with impact startups as an early-stage investor a few years ago.

My support of MSMEs has always been focused on how to help micro-, small, and medium enterprises (MSMEs) overcome barriers so that they can secure the financing and other support they need to start and grow their operations.

Along the way, I have been fortunate to work on the ground with a range of stakeholders – banks and other financial service providers, governments, international development institutions, academics, nonprofit organisations, community-based groups, technology providers, and, of course so many different entrepreneurs! I’ve supplemented all of my “real world” learning with valuable graduate degrees – first in Sustainable International Development and then later in Finance – and, of course, also with the DFI Certified Digital Finance Practitioner programme too!

What is Digital MSME Finance and why should students consider taking this course?

Digital finance is the delivery of traditional financial services through digital channels, such as computers, tablets and smartphones. Digital finance has the potential to make financial and related services accessible and affordable to MSMEs, many of whom have not been adequately served in the past.

If we pause and think about our everyday lives as well as the countries in which we live and work, it is easy to see just how often we interact with MSMEs. While larger companies tend to grab the spotlight in the news, it is actually MSMEs that are the true drivers of the global economy and innovation and will have a significant impact on sustainable development.

For perspective, an analysis by the International Finance Corporation (IFC) suggests that MSMEs account for 90% of new jobs created globally and provide 50% of employment worldwide. This is significant and, with an increasing global population, it is estimated that approximately 3.3 million jobs will need to be added each month by 2030 to match workforce growth and to sustain the global economy! As a result, fostering additional MSME creation and expansion is vital, especially in developing and emerging market countries where the population and labour force increases will be the largest.

What’s more, although an individual MSME has a relatively small environmental footprint, the large number of MSMEs that exist, especially in manufacturing and other resource-intensive sectors, means their collective environmental footprint can exceed that of larger companies. Ensuring that MSMEs transition to more environmentally sustainable production by growing in ways that will better conserve resources and reduce greenhouse gas emissions will be of paramount importance for all of us.

What role did you play in the creation of the Digital MSME Finance Course?

While I was pursuing the CDFP certification, I expressed interest in MSME finance and its intersection with new digital developments. When it came time for me to choose a project for the practical portion of the CDFP programme, my advisor encouraged me to collaborate with Digital Frontiers to create a course on Digital MSME Finance and the rest is history!

Could you elaborate on the process, thoughts, research and behind-the-scenes efforts that went into creating this course?

Building on my first-hand knowledge working with MSMEs, I spent the better part of a year conducting targeted research and speaking with others involved in the space. As I went along, I worked on the curriculum structure and content, designing it to be useful for those who are new to the topic as well as for those who have more experience with MSMEs and/or digital financing but are looking for more in-depth insights.

As a practitioner, I put a lot of emphasis on real-world applications and case studies. We all have so much to learn from each other and those who are out in the world experimenting with new business models and looking critically at how the sector is evolving from behavioural, technological and regulatory perspectives.

The lessons throughout the course are focused on providing insights and tools that students can use in their own work, regardless of their roles as entrepreneurs, academics, bankers, financiers, government employees, etc.

What was the need/challenge that you wanted to tackle in creating the course?

There has been a persistent financial gap that has and continues to restrict MSME creation and growth globally. Given the outsized role that MSMEs have in our economies – both locally and globally – this gap, in a very real way, limits the types of goods and services that communities can access and the types of employment opportunities available.

Fortunately, digital developments and new operational models have already begun to make a difference, creating a real opportunity to narrow that finance gap, but it will be up to a range of stakeholders – entrepreneurs, government officials, bankers, academic researchers, nonprofit practitioners, investors, other financial service providers – to do even more!

What were some of the hurdles you had to overcome in creating the course?

One of the challenges but also one of the most exciting realities of creating and then teaching the Digital MSME Finance Course is that the digital finance sector is evolving so quickly! This means that I am routinely adjusting course content so that all those who participate can be sure that the content accurately reflects new trends.

What were some of the highlights of creating this course?

It is difficult to say which parts of the course stand out for me as highlights since I think each module offers critical and fascinating insights, but I will say that I especially love the recorded interviews with industry experts and practitioners that are woven throughout the course. There is nothing quite like hearing directly from fintech entrepreneurs and financial service providers!

The weekly interactive class calls are another great feature of the course. The real-time conversations allow us to come together as a group and discuss interesting news and unpack the nuances of topics ranging from alternative data and credit scoring to how the global pandemic has created entirely new business models for the delivery of financial services for MSMEs.

If you could add one more module to the course, what would the contents be?

This is a tricky question! While it would always be ideal to have more time to dive deeply into each of the topics presented in the modules, I think the course does a good job covering the core themes, ideas, and developments in the digital MSME finance space.

What do you hope are the main learnings from this course? 

The Digital MSME Finance course works to establish a solid understanding of MSME financing needs and specifically how the various barriers to MSME financing can be overcome or solved through digital innovations and developments. The course looks at types of financing, explores data types and uses, real-world MSME financing models, as well as important risks and considerations to be aware of in this fast-moving sector. Students are expected to leave the course with practical insights and new tools to apply to their own work and lives.

What do you think the future of MSME finance looks like?

Digital finance, especially in the MSME space, is evolving quickly thanks to the ever-increasing access to smartphones and reliable connectivity as well as new technical capabilities for more refined service delivery, on top of better regulation.

Against this backdrop, there are several trends that I sense will continue to shape the digital MSME financing landscape in the coming years. The first is that there will continue to be more and more collaborative partnership models among banks, digital banks, and other non-bank financial service providers, such as fintech. This type of collaboration will likely dominate the way forward since there are limitations to what an entity can do independently. The good news for MSMEs is that they will increasingly have more options for their financing needs.

Another major trend that will continue to change the nature of MSME finance is the personalisation of finance products and improved MSME customer experiences or “journeys” with digital financial service providers. In addition to accessing more tailored credit, for example, MSMEs will also increasingly benefit from other value-added services designed to meet their specific operational business needs. These products will range from detailed cash flow forecasting and automated bookkeeping and invoicing.

To learn more about the Digital MSME Finance course, click here.

 

Established in 2015, Digital Frontiers Institute is a proud brand of Digital Frontiers. Learn more about the Certified Digital Finance Practitioner (CDFP) programme and find out how to enrol: https://cdfp.digitalfrontiersinstitute.org/