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 many 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
Our rationale: 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 data, covering thousands of clients, lacks the insight and knowledge required to quickly identify well-run, growth SMEs to lend to. Bank staff are also costly and have limited time to coach SMEs in financial management and records assembly - so SME lending has been labelled as generally un-profitable. Investors, in for longer terms, need higher returns than banks. Their due diligence checks extend beyond an enterprise into national politics, the economy, expected climate change, etc. Until now, impact investing has only been viable for small numbers of larger, more mature enterprises with strong potential impact footprints.
Aspiring SMEs' growth or sustainability transitions are blocked without access to predictable and affordable short-term working capital or asset financing. As these SMEs are often aggregators and processors themselves, they in turn cannot support the longer-term growth of 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 with little collateral. Their needs are beyond the scale of grants, but too small for investment level funding. Seasonality of business revenue cycles calls for meticulous cash flow management, predictable and reliable sources of affordable, unsecured, revenue-based short-term financing that can be applied during quieter passages in normal production cycles. These are the challenges that we help SMEs to overcome.
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 now to step-in to finance the missing middle for the 1,000s of enterprises qualifying for it: These are Banks and Licensed crowd funders. Banks, who have large branch networks, only need to sub-contract SME Planet to open-up pipelines of pre-qualified batches of SME clients to see the difference we can make. Licensed crowd funding is less advanced but its reach 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.
Three key foundation blocks are required before financing providers like banks can act: Data, Insight and Trust. This is where SME Planet's local business development coaches provide valuable services. We collaborate with SMEs, coordinating information sharing, coaching and advice with financing providers, guarantors, donors, development and government agencies to slash the risks, costs and time for processing financing applications and improve SME business growth management. After fund disbursement our coaches continue to monitor and advise SMEs on performance, communications and reporting. This cuts repayment risks and fund diversion to almost zero, improves bank-client insights, relations and value addition. At close out we support analytics and advocacy for banks or development 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. It's time for financing providers to hit the "Reset" button, change their 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 data, covering thousands of clients, lacks the insight and knowledge required to quickly identify well-run, growth SMEs to lend to. Bank staff are also costly and have limited time to coach SMEs in financial management and records assembly - so SME lending has been labelled as generally un-profitable. Investors, in for longer terms, need higher returns than banks. Their due diligence checks extend beyond an enterprise into national politics, the economy, expected climate change, etc. Until now, impact investing has only been viable for small numbers of larger, more mature enterprises with strong potential impact footprints.
Aspiring SMEs' growth or sustainability transitions are blocked without access to predictable and affordable short-term working capital or asset financing. As these SMEs are often aggregators and processors themselves, they in turn cannot support the longer-term growth of 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 with little collateral. Their needs are beyond the scale of grants, but too small for investment level funding. Seasonality of business revenue cycles calls for meticulous cash flow management, predictable and reliable sources of affordable, unsecured, revenue-based short-term financing that can be applied during quieter passages in normal production cycles. These are the challenges that we help SMEs to overcome.
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 now to step-in to finance the missing middle for the 1,000s of enterprises qualifying for it: These are Banks and Licensed crowd funders. Banks, who have large branch networks, only need to sub-contract SME Planet to open-up pipelines of pre-qualified batches of SME clients to see the difference we can make. Licensed crowd funding is less advanced but its reach 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 SMEs to understand their business and then reach out to a SMEs own banks that hold its transactions history. Our coaches help SMEs to present their business case clearly, backed by complete, accurate and up-to-date information in formats tailored to banking needs. Now, after four years of pilot operations, we are pleased to report that many of these banks consider financing SMEs to be not just commercially viable but also highly profitable with a positive impact on revenues, transactions, ESG ratings and SDG reporting. Credit ratings, 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 investors of organisations like CFF.
Three key foundation blocks are required before financing providers like banks can act: Data, Insight and Trust. This is where SME Planet's local business development coaches provide valuable services. We collaborate with SMEs, coordinating information sharing, coaching and advice with financing providers, guarantors, donors, development and government agencies to slash the risks, costs and time for processing financing applications and improve SME business growth management. After fund disbursement our coaches continue to monitor and advise SMEs on performance, communications and reporting. This cuts repayment risks and fund diversion to almost zero, improves bank-client insights, relations and value addition. At close out we support analytics and advocacy for banks or development 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. It's time for financing providers to hit the "Reset" button, change their perceptions and rise to the challenge!