• SMEs say digitalization is essential to staying competitive in a transformed business and economic environment
  • White paper follows release of Mastercard MEA SME Confidence Index 2021
  • Market insights for the UAE, Saudi Arabia, Egypt, Nigeria, Kenya and Ivory Coast reveal a blend of diverging perspectives and widespread agreement on key benefits of a cashless economy

 

Mastercard SME Whitepaper

Nairobi, Kenya; December 15, 2021: Small and medium enterprises (SMEs) across the Middle East and Africa (MEA) region are recognizing digitalization as essential to staying competitive in a transformed business and economic environment. The insight is one of many in a new white paper by payments technology leader Mastercard, which explores the way small businesses are viewing digital payments, online presence and the benefits of an evolving cashless economy.

The white paper, titled ‘The Digital SME: How Are Small and Medium Enterprises in the Middle East and Africa Embracing a Digital Future?’, is an in-depth follow-on study from the data-rich Mastercard MEA SME Confidence Index 2021. This piece of research released findings about the importance of digitalization and rising confidence levels as SMEs across sectors, products, and services in the region, adapt to the new and evolving economic landscape.

It revealed that SMEs in MEA recognize faster access to revenue as the biggest benefit of a cashless economy to their business (44%).  Other benefits identified include the ease of not handling or processing cash (50%) and having more convenient ways of paying suppliers and employees (50%).

Overall, 67% of MEA SMEs say e-commerce will have a positive impact on their business. A highlight from the study is that 89% of SMEs in Kenya, 81% in West Africa, particularly Nigeria, and 73% in the Ivory Coast believe the same.

The white paper also found that digitalization has progressed globally since 2018, but has seen higher traction among larger corporations and financial institutions than among SMEs. It accelerated in 2020-21 to enable continuity of business, with the OECD estimating 70% of SMEs globally intensifying their use of digital technologies due to COVID-19 restrictions. Currently, according to the Mastercard MEA SME Confidence Index, digital payment methods used by MEA SMEs include mobile (59%), online (49%), and cards (48%).

“An empowered SME sector is a growth engine for the economic development of countries across the Middle East and Africa. But the challenges are many, chief being access to funding and digitalization which have emerged as huge needs. The Mastercard MEA SME Confidence Index found that 89% of SMEs in the region see potential in digitalizing their business which is encouraging for everyone within the digital economy,” said Gaurang Shah, Head of Products, Middle East and Africa, Mastercard.

Increasingly, SMEs are recognizing the practical benefits of digitalization in day-to-day operations, as opposed to viewing it as a long-term project for the future. There’s a solid case for this when data shows that 41% of SMEs that implemented digitalization initiatives, had stronger revenue growth in 2020 than non-adopters. Digitalization of SME operations also brings the benefit of generating data that institutions need to view an SME as a “real” business with potential and make more informed credit decisions. This helps bring small businesses into the financial mainstream.

Partnerships play a key role in the digitalization of SMEs

The white paper also found that partnerships play a key role in the digitalization of SMEs. A stable, growing, connected small business can be the key to financial inclusion for the whole community. As a technology company, Mastercard has leveraged the power of partnerships to deliver inclusion by providing financial, technology, product, and services support to SMEs across the world.

“Connecting businesses to one another within the ecosystem, to help them grow and prosper, is a key objective for Mastercard. For a neighborhood vendor or store, there are simple solutions to reduce the risk and cost of cash, and open up sales to more customers. At Mastercard, we continue to leverage our technology, insights, global expertise and partnership approach to empower every business, especially SMEs, everywhere to grow digitally, become stronger than before, and prosper in a more connected, equal, and inclusive world,” said Amnah Ajmal, Executive Vice President, Market Development, MEA, Mastercard.

MEA SMEs reclaiming confidence after COVID 19

Although challenges related to the COVID-19 pandemic remain, small businesses in MEA are reclaiming confidence. The Mastercard MEA SME Confidence Index found 74% of SMEs in the region are optimistic about future growth, guided by the potential for digitalization, better data, access to credit and upskilling.

According to the Organization for Economic Cooperation and Development (OECD), up to 70% of SMEs globally have intensified their use of digital technologies in the wake of COVID-19. However, the gaps in SME digital adoption have not been filled. The challenges include access to infrastructure, lack of a data culture and digital awareness, and financing gaps for transformation costs, among others. Access to financing remains a key concern for SMEs worldwide, with the IFC estimating an unmet need of USD 5.2 trillion per year.

Through technology services, cyber assessments, insights, grants, digital training, mentoring platforms and knowledge initiatives, Mastercard will contribute $250 million over five years to support small businesses’ financial security globally. As part of its goal to build a more sustainable and inclusive world, Mastercard has committed to connect 50 million small businesses, including 25 million women entrepreneurs globally, to the digital economy by 2025.

Ends

About Mastercard (NYSE: MA), www.mastercard.com Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.