Literature Review: Micro and Small Enterprise (MSEs’) Financing in Kenya, Uganda and India

The discourse surrounding micro and small enterprise (MSE) lending over the past forty years has largely treated MSMEs as one singular, monolithic category. In emerging markets, MSEs make up the majority of enterprises, each with unique financing needs. Even targeted MSE metrics, like overall credit gap estimates, while useful on a macroeconomic level, tend to obscure the differences among various MSE sub-segments. This one-size-fits-all approach within the financial inclusion community has led to blind spots, particularly for the very enterprises that international development efforts should prioritize, such as women-owned businesses and the smallest MSEs—nano and micro-enterprises.

In order to break down the MSME monolith and to shine a spotlight on some of the most excluded and vulnerable firms, CGAP has launched a multi-phase research program focused on understanding the unique needs of women-led nano and micro enterprises. This document is the result of the first phase of that research program, a literature review.

The Literature Review delves into the landscape of women-owned nano and micro-enterprises in Kenya, Uganda, and India, summarizing the existing knowledge and gaps and guiding readers to valuable resources that can enhance understanding through segmentation, with the aim of unlocking more capital and effectively meeting these enterprises' financial and non-financial needs. The review suggests that data and information about these enterprises, especially those classified as ‘nano,’ is sparse at best. There is a limited understanding of what a nano enterprise is within the broader MSME context, and even less of an understanding of what their unique financial and non-financial needs are. Therefore, to truly support these vital businesses, we must first dissect the various segments, understand their market dynamics, and identify their specific needs.
 

Disclaimer

This work was commissioned by CGAP and funded in whole or in part by CGAP as part of its effort to monitor the state of the microfinance sector. Unlike CGAP’s official publications, the viewpoints and conclusions expressed are those of the authors and they may or may not reflect the views of CGAP staff.