According to Fortune Magazine, there are “somewhere between 365 and 445 million micro, small, and medium enterprises (MSME) in emerging economies.” Despite the large number of businesses, as “of 2017, 70% of women-owned small- and medium-sized businesses in the developing world do not have access to adequate financing. This represents a $300 billion credit gap each year.”
With such a huge for small firms around the world Mastercard and Unilever have partnered to offer lending options to small businesses. Currently the two companies are working together “on new lending models for micro merchants in Kenya”, but if successful has the potential to expand further.
The idea is to offer “low-risk micro-credit, which is underwritten by a local bank.” To do this both parties want to establish a digital platform which tracks small and micro businesses purchasing history, transforming it into a proxy for credit offering. Similar to how Intuit tracks its businesses incoming revenue to offer reasonable loan offerings, Mastercard and Unilever would focus on international firms struggling to find financial support.
The pool of potential growth is large in emerging economies and, if successful, could see the two companies on the ground level of an industry worth over $300 billion.