84% MSMES NOW HAVE ACCESS TO FORMAL FINANCIAL SERVICES
MBABANE – There has been an increase in micro, small and medium enterprises (MSMEs) having access to formal financial services.
At least according to the latest Blended FinScope MSME Survey 2023, 84 per cent of MSMEs now have access to formal financial services, an increase from 76 per cent in 2017. However, only 52 per cent of MSME owners have a bank account, a sharp decline from 69 per cent in 2017.
The survey reveals that mobile money remains a key financial tool, but formal credit uptake is still low due to strict lending criteria and lack of collateral. The report suggests that while financial inclusion has expanded, many MSMEs are still excluded from meaningful credit opportunities, limiting their ability to grow and invest in their businesses.
The study highlights a notable shift in MSME ownership demographics. Women and youth are increasingly taking up entrepreneurship, with 67 per cent of start-ups being female-led. However, this trend does not necessarily translate to long-term business sustainability. As businesses mature, female ownership declines, indicating possible challenges in scaling and sustaining enterprises.
Additionally, only 28 per cent of MSME owners are youth (aged 18–35), showing that while young people are engaging in entrepreneurship, the numbers remain low compared to other segments.Targeted interventions, such as youth entrepreneurship funding and mentorship programmes, could help bridge this gap.
The survey further reveals that the wholesale and retail sector continues to dominate the MSME landscape, followed by agriculture and service-based businesses.However, the survival rate of businesses remains a concern. More than one-third of MSMEs are in the start-up phase (0-2 years), while the proportion of mature businesses (6+ years) has declined by 11 per cent since 2017.
This decline in business longevity is attributed to various factors, including economic shocks, access to finance constraints, and market saturation.The COVID-19 pandemic significantly impacted MSMEs, with many reporting reduced earnings, operational challenges, and, in some cases, permanent closure.
Despite 84 per cent of MSMEs being aware of business development services (BDS) providers, only 30 per cent have used these services.The report suggests that existing BDS offerings do not adequately meet the needs of MSMEs, leading to low uptake.
Business owners have indicated that the available support services are either too expensive, inaccessible, or not tailored to their specific business challenges.The study recommends a realignment of BDS offerings to better address the actual needs of small businesses.
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