Tag Archive: SME

The Secret behind Germany’s SMEs Growth, The Germany “Mittlestand”, SMEs Access to Finance

-Like elsewhere in many parts of the world, in Germany the small and medium-sized enterprises (SMEs) form the backbone of the German economy. According to KfW (Kreditanstalt für Wiederaufbau), there are approximately 3.6 million SMEs and they offer employment to more than 60% percent to the working population. (See a summary of further information on  “THE SME SECTOR IN GERMANY” by KfW) .

-Who are the Germany “Mittlestand” and what makes them stand out?  I came across an article titled ‘Introducing the German Mittlestand’ -The article describes 8 facts about the Germany’s ‘Mittlestand’ and what makes them productive. (Read on at Make it in Germany)

-What is the secret of SME growth in Germany and what can the world learn from them? An article by the Telegraph.co.uk describes a broader picture behind the success and growth of the Germany’s SME’s and how they compare with SMEs in the UK and elsewhere in the world. One of the important issues addressed in the article, is the Germany SME access to business financing which is hugely provided by institutions such as the KfW Development Bank among others.

Limited access to SME Financing is a global  problem. I’ve listened to small business owners talk about their frustrations in their businesses. Most of them talk about the difficulties they face while trying to raise business funds through bank financing. According to research, a large number of SMEs are forced to seek alternative methods of business financing. Some raise finances through external sources such family and friends due to the fact that they have limited access to bank loans. A separate article by (OECD) The Organisation for Economic Co-operation and Development, highlights other forms of alternative financing and the importance of having broad range of financing instruments available to SMEs besides just bank financing. Easy access to alternative finances as is important to in order to continuously improve on the  performance of SMEs,  innovation, employment and fuel growth, ( Read the full OECD report here)

Still on alternative SME Financing, are slowly taking a bold step to help improve access to financial Services around the world. Examples of such companies include  Village Capital and PayPal . According to Paypal, the main is to “…support social impact innovators who are making financial services more accessible to low-income individuals, families and small businesses…” (Read on here)

Silicon Valley-Backed Start-ups Disrupting the Financial services in Emerging Markets

Anyone who knows about the problems associated with the lending industry  in Africa, especially for women enterprenuers or SMEs, would definitely understand what Hilary Clinton was talking about on  ‘the Goldman Sachs 10,000 Women: Proving the Case for Women Entrepreneurs’-She said, “It’s a big market and somebody’s gonna serve it”

Lack of funds for Micro and Small Enterprises still remains one of the greatest obstacles to economic growth. It’s not a secret that many SMEs in developing countries are not catered to by banks because they are perceived as high risk category. But that’s slowly becoming a thing of the past, thanks to the power of digital information.

Well, finally someone has decided to disrupt the financial services industry in the emerging markets. A few Silicon Valley-backed start-ups are slowly stepping into the business of lending to micro / small business entities engaged in Agriculture, Farming, and Manufacturing, Trading, Transport and Logistics. They are looking to support SMEs, Microenterprises and grant them access to much needed capital.

So, who are they and how do they work? In Kenya for example, Saida  one of them, which uses information collected from Apps to look at how people use their smartphones and in turn analyse the data and the users’ behaviour traits to place them on a credit worthiness scale. (How excatly does Saida work?)

Another similar one is Branch, a for-profit, socially-conscious company based in San Francisco and Nairobi. Branch was co-founded by Matthew Flannery who is also the co-founder of KIVA.Org.  Similarly,  Inventura  and Lendup are other great technologies among many, that are helping to solve the problem of limited access to financial grants in emerging Markets.

More on how these App-based Lending startups operate 

Thanks to technology, a  report by Omidyar Network suggests that between 300 and 580 million people without a credit rating could benefit from app-based lending.


More depth information about the “Lending Startups Look at Borrowers’ Phone Usage to Assess Creditworthiness” On WSJ