Beyond Access: Why integrated risk strategy is the missing link in SME’s growth story in Africa
Small and medium-sized enterprises (SMEs) are steadily gaining traction in digital finance, positioning themselves as a core driver of economic growth. Despite this progress, industry analysts note that risk literacy remains a persistent challenge.
According to risk management experts at EIRS, this gap may be limiting the financial inclusion expected to support job creation and innovation across Africa and the Middle East.
SMEs account for about 96% of registered companies in the Middle East and North Africa and contribute roughly half of employment, yet they receive only 7% of total bank lending, among the lowest shares globally.
In sub-Saharan Africa, many SMEs continue to face limited access to loans or credit lines, alongside high borrowing costs compared to more developed markets.
Digital finance growth
The digital finance revolution, driven by mobile money, e-lending, and embedded financial services, has opened new pathways for inclusion. SME-focused digital tools are expanding, with fintech adoption increasing across the region.
Digital platforms designed for business invoicing, for instance, recorded notable uptake in 2024. However, access alone has not addressed all constraints.
Abhishek Jain, chief executive officer at EIRS, said SMEs are increasingly able to reach digital finance solutions but often struggle to use them effectively.
He noted that risk literacy, including understanding credit, insurance, cash-flow dynamics, and digital finance mechanisms, remains the missing link between access and sustainable growth.
This gap has measurable business implications. While digital payment adoption is high in some markets, including Kenya where 91% of SMEs use digital payments, many businesses still lack the financial and risk understanding needed to translate access into creditworthiness, scalable lending, or appropriate insurance coverage.
Risk literacy is key
Across the region, SMEs continue to face a financing deficit despite their role in employment. Without sufficient risk comprehension, lenders often classify these businesses as high-risk or unbankable. Even in markets with strong mobile fintech adoption, knowledge gaps remain.
Research indicates that SME owners with stronger numerical and digital skills are more likely to adopt mobile banking, which is linked to improved financial outcomes. This points to risk literacy as a key factor in advancing inclusive finance.
Financial inclusion and risk literacy also carry macroeconomic implications. Analysis by the International Monetary Fund shows that closing financial inclusion gaps could increase annual growth rates by up to 1% over the medium term in regions where SMEs play a central role.
Abhishek Jain said the focus should move from access to competence, adding that policymakers, fintech firms, and financial institutions need to integrate education into SME onboarding processes.
He noted that when entrepreneurs understand and can communicate risk, lenders are more likely to provide capital, insurers can design suitable products, and financial ecosystems can function more effectively.
Strengthening risk literacy as a strategic priority could enable SMEs to make better use of financial tools. For many entrepreneurs across the Middle East and Africa, improved understanding of risk may determine how effectively financial inclusion translates into long-term business growth.
This is a company press release that is not part of editorial content. No journalist of Africa Digest News was involved in the publication of this release.
