‘MSME Champions’ is a series of interviews capturing the expertise and experiences of individuals and institutions supporting enterprises in the missing middle of agriculture, as part of an advocacy campaign for the International Day for Micro, Small and Medium-sized Enterprises (MSMEs) on 27 June 2024. In this interview, Dorothy Nyambi, President and Chief Executive Officer (CEO) at MEDA tells us about how the organization supports rural MSMEs with access to funding, knowledge and networks.
The International Day for Micro, Small and Medium-sized Enterprises (World MSME Day) is an opportunity to reflect on the key role of enterprises in the missing middle of agriculture. Please tell us why and how MEDA supports their growth.
World MSME Day shows their crucial role, especially in agriculture’s “missing middle.” Mennonite Economic Development Associates (MEDA), a non-profit, supports them by addressing poverty with agri-food business solutions. We offer financial inclusion with tailored financial services and partner with local financial institutions to ensure the necessary growth capital. We also enhance MSME managerial and technical skills with capacity and business development programs, improving their productivity and market access. We develop networks and partnerships. And MEDA helps MSMEs connect to broader markets, supporting their growth, sustainability, and contribution to economic development.
Here’s how and why MEDA supports the growth of MSMEs in the agricultural sector:
1. Access to Finance and Investment: Agriculture MSMEs have limited access to finance, hindering their growth and innovation. We addresses it with financial inclusion. We offer tailored financial services, including loans, investment capital, and grants to them. In Central America we work with Micredito to give access to agri-MSMEs. In Africa, the Mastercard Foundation Africa Growth Fund reaches a multitude of agri-food MSMEs via traditional and non-traditional intermediaries such as investment vehicles.
2. Capacity and business development support: MSMEs need strategic options to boost productivity and reach new markets. We create value, by improving managerial and technical acumen. Our programs include modern farming techniques, business management, market analysis, and value chain integration. Giving MSMEs the knowledge and skills, we increase efficiency, productivity, and competitiveness. Thus, we work with specialists like Entrepreneurial Services Partners based in Abidjan, Cote d’Ivoire, who advise MSMEs on sound business and management practices.
3. Market Access and Value Chain Development: Connecting MSMEs to markets and value chains is crucial for growth. Without it, they can’t scale or achieve sustainable profits. We link markets to our networks and partnerships with larger agribusinesses, exporters, and retailers. We comprehend market demands and standards, ensure quality requirements are met, and uncover lucrative opportunities. MEDA’s Program plus takes an integrated value chain view where small farmers to end consumers benefit from sector efficiency and coordination.
By focusing on these, MEDA supports agriculture MSME growth and sustainability. And it im-proves sustainable poverty reduction and economic development.
Please describe some of the challenges your institution faces when lending to agricultural MSMEs in MEDA. What are some of the innovative approaches you use to navigate them?
The agro-ecosystem is still developing, requiring complex partnerships that maybe incomplete. MEDA builds a system addressing the fragmentation and fosters long-term, holistic partner-ships, in Africa, Latin America, and Asia. The partnerships have finance as the crucial compo-nent. We integratee it to improve effectiveness. We face risks from climate variability, lack of collateral, information asymmetry, and infrastructure deficits. To overcome them, we use tac-tics such as risk mitigation through insurance and blended finance, flexible financial products tailored to farming cycles, technology adoption, capacity development, and forming partner-ships with market linkages and growth support for MSMEs. These innovative approaches re-duce the risks in agricultural lending, increase financial inclusion, and support the sustainable growth of agricultural MSMEs.
What message would you like to share with donors, commercial banks and other players that hesitate to lend to agricultural enterprises?
MEDA wants donors, commercial banks, and stakeholders to invest in agricultural enterprises in emerging and developing countries by revealing the high potential for growth and returns, great social and economic impacts, and reduced risks with technical aid, market access, and risk-sharing. We also emphasize sustainability, green stewardship, an investment track record aligning with global development goals, and promote innovation. MEDA alleviates hesitations and fosters collaboration to amplify impact and share risks.
Why is gender-lens investing important to boosting finance for MSMEs?
There are three MEDA priorities when pursuing gender-lens investing:
Addressing Funding Gaps and Inequality
Gender-lens investing (GLI) addresses the funding gap for women-led MSMEs. Despite owning a substantial number of small businesses globally, women face more challenges with finance compared to male counterparts. Investing capital in women-owned or women-led businesses reduces inequality and ensures more equitable resources. It empowers women entrepreneurs and stimulates economic growth by including more diverse and innovative business perspectives.
Driving Economic Growth and Development
Investing in women-led MSMEs has a growth multiplier effect. Women are more likely to reinvest their earnings in their families and communities, leading to improved health, education, and welfare outcomes. This reinvestment ensures more inclusive and sustainable economic development. Furthermore, studies show that companies with diverse leadership, including gender diversity, perform better financially. Hence, gender-lens investing enhances MSME economic performance by contributing to broader stability and growth.
Enhancing Market Opportunities and Innovation:
GLI opens up new opportunities by supporting market segments that are traditionally underfunded. Women entrepreneurs often identify and address unique market needs and niches, leading to innovative products and services. With the necessary capital in women-led MSMEs, investors tap into these underserved markets and benefit from the fresh ideas and solutions from women. This leads to new industries and diversifying the economic landscape, fostering greater MSME innovation and competitiveness.
Overall, GLI promotes gender equality, social justice; and drives economic growth, enhances markets, and fosters MSME innovation. It is an economic imperative.
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About the Champion
Dorothy Nyambi, Ph.D., serves as the CEO and President of Mennonite Economic Development Associates (MEDA), focusing on empowering Micro, Small, and Medium Enterprises (MSMEs) globally. Under her leadership, MEDA has significantly advanced sustainable economic development, particularly for women and youth in over 100 countries. Dorothy champions innovative solutions that bridge the gap between small businesses and global markets, promoting growth and resilience.