About SME Planet
What we do
SME Planet is a non-profit federation of social enterprises providing sustainable business development coaching, mentoring and advisory services to SMEs across East, South & West Africa, Central Asia, the Pacific, the Americas and the Caribbean.
Our affiliates are aligned in their ethics, integrity and dedication to help good small and medium scale enterprises (SMEs) to get the financing they need to grow sustainable and socially inclusive businesses.
How we do it
We focus on banked SMEs who aggregate inputs from local suppliers, like farmers, and add economic value whilst demonstrating resilience, a commitment to quality, environmental and labour standards, fair trading and sustainable business growth strategies. We develop skills, knowledge and confidence through collaborative working enriched with our global expertise, tailored to local circumstances and cultures.
Our affiliated teams of more than 100 qualified and experienced sustainable business development and financing coaches have been freely working and collaborating together for more than 10 years. They help SMEs understand and address the practical challenges of growth strategies, financial management, compliance, resilience, sustainable business growth, new technologies, legal and market compliance requirements. In this way SMEs achieve climate adaptation, green supply chains, provide better quality jobs, empower women entrepreneurs and young leaders.
Governance
Ethics, integrity, traceability and trust are the responsibility of our five regional Directors with oversight by an un-paid Geneva-based Headquarters team that manages our non-profit, non-governmental organisation.
Our Headquarters hub hosts intellectual property such as didactic materials, a SME database, a technology platform and a “member blog space”. It also manages partner coordination, assists in fund-raising and network communications. Photo: Pretty Shoes, Casablanca 2021
The Forgotten "Missing Middle"
SMEs the world over struggle to get financing in the range US$ 40,000 to US$ 2,500,000 and this is holding back growth. World Bank, IFC, ICC & ADB studies from 2017 to 2024 show the SME financing gap to be increasing by ~>15% every 2 years; it now exceeds US$ 4Tn.
This is important because SMEs in low and middle income countries:
At the same time, importing countries and buyers continue to add to the burden of supply country SME exporters' costs through new import compliance, quality, traceability, transport, packaging, pollution and consumer credentials. Each new credential requires changes to a SMEs supply chain or production processes and has a verification and recurring audit cost for the exporter measured in thousands of US dollars. Current banking practices drive more than 65% of exporting SMEs to resort to buyers's advances or vendor financing arrangements that restrict the use of funds and are expensive in sales discounts.
Financing providers blame the gap on poor quality and unreliable business information, lack of collateral or security for funds and foreign exchange volatility measures to remain compliant with international banking regulations. Bank staff are costly and have limited time to coach SMEs - rendering the SME lending space un-profitable. Investors, in for longer terms, need higher returns than banks. Their due diligence checks extend beyond an enterprise to national politics, the economy, expected climate change, etc. Until now, this has only been viable for small numbers of larger, more mature enterprises with a wider potential impact footprint.
Aspiring SMEs' growth or sustainability transitions are blocked without access to predictable and affordable short-term working capital. As these SMEs are often aggregators and processors themselves they in turn block the longer-term growth of their farmer and other domestic economy suppliers, no matter how much donor funding goes into primary development and start-ups. Supply chain enterprises are lean businesses. Their needs are beyond the scale of grants, but too small for investment level funding. Seasonality of business cycles calls for predictable and reliable sources of affordable, unsecured short-term financing that can be applied when gaps in normal production cycles permit. These challenges constitute the proverbial "elephant in the room".
So what can be done?
A global reset of SME financing is required. Only two categories of financing provider would have the capacity, established mechanisms, regulation and international channels to step-in to finance the missing middle for the 1,000s of enterprises qualifying for it: Banks and Licensed crowd funders. Banks, who have large branch networks, can do this right away with SME Planet and by making some small internal policy and procedure adaptations. The reach of licensed crowd funding is less advanced but is extending across jurisdictions - see: African Crowd Funding Association, Other initiatives include The Collaborative for Frontier Finance which has built a network of impact funders and a "Fund of Funders" to aggregate small but growing businesses (SGBs) funding needs to asset manager scale.
Two key foundation blocks are required before financing providers like banks can act: Data and Trust. This is where SME Planet's local business development coaches provide valuable services. We collaborate with SMEs, coordinate coaching and advice with financing providers, guarantors, donors, development and government agencies to slash the risks, costs and time of financing applications and improve SME performance. After fund disbursement our coaches continue to monitor and advise SMEs on performance, communications and reporting cutting fund diversion and improving bank-client relations. At close out we support analytics and advocacy for banks or agencies to assimilate results and plan how to scale-up the approach.
As a result we are witnessing amazing changes in clean growth across agri-business exporters' supply chains, employment quality, women entrepreneurs empowerment, business confidence and the creation of good jobs with written contracts.
In these times of reduced donor funding the work of SME Planet's affiliates helps economies to expand out of existing resources, putting creative and innovative SMEs onto a sustainable growth and investment pathway. Its time for a "Reset", for financing providers to change our perceptions and rise to the challenge!
This is important because SMEs in low and middle income countries:
- Supply >80% of leading economy's non extractive imports,
- Provide 70% of their own country's export diversification
- Employ 90% of the workforce
- Aggregate suppliers, provide reliable financial and technical support to thousands of small farmers, sub-contractors and communities at their own cost
- Yet get less than 3% of global financing or investment funding.
At the same time, importing countries and buyers continue to add to the burden of supply country SME exporters' costs through new import compliance, quality, traceability, transport, packaging, pollution and consumer credentials. Each new credential requires changes to a SMEs supply chain or production processes and has a verification and recurring audit cost for the exporter measured in thousands of US dollars. Current banking practices drive more than 65% of exporting SMEs to resort to buyers's advances or vendor financing arrangements that restrict the use of funds and are expensive in sales discounts.
Financing providers blame the gap on poor quality and unreliable business information, lack of collateral or security for funds and foreign exchange volatility measures to remain compliant with international banking regulations. Bank staff are costly and have limited time to coach SMEs - rendering the SME lending space un-profitable. Investors, in for longer terms, need higher returns than banks. Their due diligence checks extend beyond an enterprise to national politics, the economy, expected climate change, etc. Until now, this has only been viable for small numbers of larger, more mature enterprises with a wider potential impact footprint.
Aspiring SMEs' growth or sustainability transitions are blocked without access to predictable and affordable short-term working capital. As these SMEs are often aggregators and processors themselves they in turn block the longer-term growth of their farmer and other domestic economy suppliers, no matter how much donor funding goes into primary development and start-ups. Supply chain enterprises are lean businesses. Their needs are beyond the scale of grants, but too small for investment level funding. Seasonality of business cycles calls for predictable and reliable sources of affordable, unsecured short-term financing that can be applied when gaps in normal production cycles permit. These challenges constitute the proverbial "elephant in the room".
So what can be done?
A global reset of SME financing is required. Only two categories of financing provider would have the capacity, established mechanisms, regulation and international channels to step-in to finance the missing middle for the 1,000s of enterprises qualifying for it: Banks and Licensed crowd funders. Banks, who have large branch networks, can do this right away with SME Planet and by making some small internal policy and procedure adaptations. The reach of licensed crowd funding is less advanced but is extending across jurisdictions - see: African Crowd Funding Association, Other initiatives include The Collaborative for Frontier Finance which has built a network of impact funders and a "Fund of Funders" to aggregate small but growing businesses (SGBs) funding needs to asset manager scale.
Our focus on building "Predictable and Affordable" regular financing leads us to engage first with a SMEs own banks that hold its transactions history. Now, after four years of pilot operations, we are pleased to report that many of these banks have internalised financing SMEs as commercially viable with a positive impact on bank revenues and transactions, ESG ratings and SDG reporting. Credit histories, business insights and data built under our approach also render these SMEs able to obtain factoring facilities, trade and supply chain financing, or to become more attractive for the members of organisations like CFF.
Two key foundation blocks are required before financing providers like banks can act: Data and Trust. This is where SME Planet's local business development coaches provide valuable services. We collaborate with SMEs, coordinate coaching and advice with financing providers, guarantors, donors, development and government agencies to slash the risks, costs and time of financing applications and improve SME performance. After fund disbursement our coaches continue to monitor and advise SMEs on performance, communications and reporting cutting fund diversion and improving bank-client relations. At close out we support analytics and advocacy for banks or agencies to assimilate results and plan how to scale-up the approach.
As a result we are witnessing amazing changes in clean growth across agri-business exporters' supply chains, employment quality, women entrepreneurs empowerment, business confidence and the creation of good jobs with written contracts.
In these times of reduced donor funding the work of SME Planet's affiliates helps economies to expand out of existing resources, putting creative and innovative SMEs onto a sustainable growth and investment pathway. Its time for a "Reset", for financing providers to change our perceptions and rise to the challenge!