THE SOLUTIONS: Digital Non-Financial Services  that build sustainable SMEs

THE SOLUTIONS: Digital Non-Financial Services  that build sustainable SMEs

Evidence suggests that SMEs account for 90% of all jobs and contribute about 40% to GDP in most African economies. To this end several SME support mechanisms exist in the region to assist the developmental efforts of businesses in this category. Unfortunately, however, several of these support mechanisms lack integrated and holistic one-stop solutions addressing the unique needs of especially, Women SMEs (WSMEs) and Youth SMEs (YSMEs).

Financial services (such as credit, savings, insurance, etc) are most important support mechanisms to these SMEs in Africa. But at the same time, these support mechanisms are just loop-sided, leaving WSMEs and YSMEs in search of other complementary solutions elsewhere.

There are several literatures suggesting that Youth and Women entrepreneurs do not just need finance only, but many other Non-Financial Services (NFS). When NFS are combined with financial services, WSMEs and YSMEs grow sustainably. A joint study by the IFC & FMO has observed that “Small businesses need more than just finance. Training, mentoring, networking, and other non-financial services can give entrepreneurs a vital leg-up”.

Some other non-financial needs of WSMEs and YSMEs include; information, business formalization, coaching, leadership skills, and staff management skills. The rest are; access to markets, negotiation skills, business management skills, technology, etc.

If Non-Financial Services do not complement financial services, small enterprises are largely deemed unsustainable and without resilience. They go “hand in hand”. For example, imagine a woman entrepreneur who gets credit from a bank, but lacks business management and leadership skills, such entrepreneur would end up collapsing her business with bad management practices, whilst jeopardizing credit recoverability by the bank (i.e rising NPLs). This impairs the long-term sustainability of the banks in particular and the economy in general.

It is in this light that SME support mechanisms that encapsulate NFS as complementary solutions to financial services are strongly advocated. A recommended approach is an integrated sales model within Customer Relationship Management (CRM) framework. The model is seen as a holistic one-stop sales approach that conscientiously bundles financial and non-financial services together in CRM framework.

Generally, CRM is considered as an organizational strategy, philosophy and process that enhances service and product quality offered to customers. With this, customers need not go round in search of complementary solutions elsewhere. Such solutions take into consideration how best to satisfy customers holistically.  Gender, age, and behavioral specificities are also considered during product design-segmentation approach- is adopted.

The following are suggested digital solutions that promote NFS inclusion for WSMEs and YSMEs.

  1. Engage end-users during Non-Financial Services Design

This solution first starts by identifying and segmenting end-users of non-financial services according to their business type, gender, age, and behavioral specificities (characteristics). This is essential because, non-financial service needs of WSMEs are entirely unique from that of YSMEs. For example, most youths-led SMEs (especially males) have higher risk appetite for new business opportunities whilst women-led SMEs are not. YSMEs have higher tendencies to explore new business opportunities with the hopes of striking greater profits. On the other hand, WSMEs are more risk averse to explore new business opportunities. Also, most African women are generally noted to be very busy and encumbered with family duties (i.e baby care, household chores, etc), leaving them little or no chance to attend physical “sit-down” lesson on NFSs. All these characteristics must be embedded in the NFSs product design. This may guarantee enjoyable user experience (UX) when product is launched.

  1. Bundling NFSs with Financial Services into a single sales package

Bundling non-financial services into the conventional financial services (such as credit) will ensure that WSMEs and YSMEs enjoy NFS as complementary service unwittingly. For example, this could be done when Banks expressly include NFSs clauses into loan contract for these SMEs. Portion of the contract could read, for example as; “customer must participate in NFS in order to enjoy interest discount, or larger loan amount for next loan cycle”. Usually, customers do not want to pay extra money to enjoy NFS, hence bundling NFS into conventional financial services such with negligible margin as interest is deemed strategic for inclusivity.

  • Set concrete target & KPIs for NFSs inclusivity and monitor

Setting relevant KPIs to monitor NFSs performance and its impacts on other financial services is usually not an easy task. However, KPIs measurements would demonstrate business case to senior management and the Board, while highlighting opportunities for improvement. Suggested KPIs include; Service Awareness & Perception Score (SAPS), Customer Retention Rate (CRR), Customer Satisfaction Score (CSS), portfolio at risk (PAR), etc. Also be sure to embed KPIs with I.T adaptability for easy report automation and analysis. CRM monitoring tool is a perfect example in this regard. Also, set deliberate targets for NFSs inclusivity.

  1. Use cell phones & mobile money to promote NFS

Cell phones penetration in Africa has seen impressive growth rate since the last decade. With current penetration rate of 43%, it gives FSPs an opportunity to leverage on it to scale NFS provision and awareness creation. Mobile money adoption and usage is no exception. Market information (such as prices, inventory availability, seasonality, etc) and daily quotes on good leadership skills could be given to SME clients periodically via SMS. This could be done in partnership with the Telcos. Simplified iterative USSDs and voice prompts linked to mobile money accounts (with negligible charges) could be offered to these SMEs with focus on business development and negotiation skills, for example.

  1. Use Virtual platforms (e-learning & LMS) to deliver NFS

It is an established fact that youths are naturally attracted to technology and electronic platforms thanks to smart-phone devices. Learning Management Systems (LMS) and e-learning platforms could facilitate and scale non-financial services to YSMEs using smart-phones devices. With LMS, Financial Service Providers (FSPs) could track and monitor the progress of participants as they graduate through the course modules. Electronic learning(e-learning) platforms perform similar functions. Here learning materials (in word, PDF, audio and video contents) are created and uploaded online, allowing learners to access them anywhere and anytime. These platforms have greater potentials to covering wider participants.

  1. Use Social media platforms to promote NFS

Socia media platforms (such as Facebook, Youtube, WhatsApp, Instagram, etc) are one such cheap medium through which FSPs could extend NFS to WSMEs and YSMEs. This is because social media adoption and usage in Africa has reached a very impressive rate. With a dedicated relationship manager to handle the social media platforms, a group chat or dedicated page is created for NFS purpose.

BUT, for greater impact, these solutions are run concurrently with;

  • Senior Management buy-in and willingness to allocate good budget for NFS cannot be over-emphasized. This is because, SMEs are usually unwilling to pay for NFS. Senior management should therefore show strong corporate-will towards supporting NFS provision in funding and also in communication, posture, and attitude. Regular corporate communication to staff, newsletters, and media engagements should purposefully tackle NFS.
  • Data protection must be guaranteed for these SMEs who are giving their details for digital NFS. Authorities should endeavor to create a strict cyber security environment to thwart the activities of fraudsters who may victimize unsuspecting SMEs. Stricter regulations and compliance are strongly recommended.
  • Awareness creation and education to WSMEs &YSMEs especially, those in the rural settings can go a long way to help in the adoption and usage of the suggested solutions. Without that, these solutions will not yield the intended purpose.

When NFSs are given as complement to conventional financial services, WSMEs and YSMEs, grow sustainably and become more profitable. Financial Service Providers get the benefits and the economy gets the bounty.


Samuel is a Banker/SME Incubation & Acceleration Consultant

Email: [email protected]

Dr.  Obuobi is a Banker/SME Consultant & Leadership Coach

Email: [email protected]





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