The Great Data Debate
2024 Theme
Small and medium enterprises (SMEs) are the backbone of economies worldwide, accounting for over two-thirds of global employment and playing a critical role in job creation and economic resilience. However, persistent financing gaps limit their potential to drive inclusive growth and recovery from economic shocks.
The G20 Global Partnership for Financial Inclusion (GPFI) MSME Action Plan provides a timely framework to address these challenges, fostering resilience and innovation among SMEs while aligning with sustainable development goals (SDGs). The Global SME Finance Forum, an official side event of the G20 South African Presidency, will present GPFI’s comprehensive roadmap to address the systemic barriers hindering SMEs’ access to finance.
G20 MSME Action Plan: Financing and Policy Enablers
Resilient Value Chains: Strengthen sustainable sourcing, fair labour practices, and circular economy models to future-proof SMEs against disruptions.
Tailored Financial Solutions: Provide customised financial tools to promote the financial health and stability of micro and small enterprises.
Scaling Success Stories: Highlight examples of SMEs achieving growth through innovative financing models and sustainable business frameworks.
Digital Innovation: Powering SME Growth and Global Competitiveness
Value Chain Integration: Highlight success stories of SMEs scaling through digital integration, such as streamlined supply chains or cross-border e-commerce platforms.
Global Reach: Equip SMEs with technology to compete internationally, from cloud based accounting systems to AI-driven market analytics.
Empowering SMEs in Sustainability, Resilience and Growth
Policy Reforms: Promoting policies that facilitate working capital, trade finance, and digital payments while supporting financial technologies that simplify SME operations.
Public-Private Partnerships: Encouraging collaboration between governments, financial institutions, and private sector stakeholders to mobilize resources, mitigate risks, and scale impactful solutions
Synopsis:
While data was a very wide topic, for the purpose of this debate the focus was on alternate data. The use of alternate data in SME finance has the potential to revolutionize access to credit, particularly for underserved businesses. However, it also comes with challenges related to privacy, fairness, and regulatory compliance.
The debate consisted of two teams (each with 3–4 speakers) discussing opposing arguments. The session was actively moderated to keep interventions brief, lively, and focused on the core issues.
Team 1: Supported the use of alternate data and advocated for its scale adoption. They highlighted that by leveraging non-traditional data sources such as utility payments, e-commerce transactions, and digital footprints, lenders could assess creditworthiness more holistically and efficiently. This not only accelerated loan processing but also reduced costs, enabling SMEs to access funds quickly. Additionally, alternate data promoted financial inclusion by bringing informal or digitally active SMEs into the formal financial ecosystem, while allowing lenders to customize financial products to better suit the unique needs of small businesses. Overall, it fostered innovation, supported economic growth, and empowered SMEs to thrive in competitive markets.
Team 2: Opposed the use of alternate data and its scale adoption. They argued that despite its potential, alternate data in SME finance raised significant concerns around privacy, data security, and fairness. Non-standardized and potentially biased data sources, such as social media activity, could lead to flawed or discriminatory lending decisions. SMEs without a strong digital presence risked being excluded, further widening the gap between digital and non-digital businesses. Additionally, over-reliance on technology and algorithms could result in errors, while the lack of clear regulatory frameworks created uncertainty for lenders. The cost of integrating alternate data systems and ensuring compliance with data protection laws added further complexity, making it essential to address these challenges before fully embracing alternate data in SME finance.
The speakers in this session were very lively and openly challenged each other's arguments. Hence, the choice of speakers was key, supported by active moderation.
Speakers:
Aliou Maïga, Regional Industry Director, Financial Institutions Group, Africa, International Finance Corporation
Ayodele Ojosipe, Head, Business Development and Relationship Management, Development Bank of Nigeria Plc
Ayodele Olojede, Divisional Head, Retail and SME, Wema Bank, Nigeria
Azer Songnaba, Co-founder and Chief Investment Officer, Cauris
Mercy Mutua, Head, Access to Finance, Mastercard Foundation
Patrick Reily, Co-founder, Uplinq
Rakesh Vazirani, Director – Decarbonization & Cleaner Production, Supply Chain Sustainability, Bureau Veritas
Moderator:
Veronica Nyhan Jones, Global Head, Climate Capacity and Inclusion Accelerator, International Finance Corporation (IFC)