Objectives of the SI-Findex

This SI-FIndex is an aggregation of various indicators of access to, usage of and barriers encountered to financial products and services. The indicators collectively create a final aggregated assessment for the level of financial inclusion of MSMEs. Their level of inclusion is a strong determinant of a country's progress in attaining sustainable development goals and meeting growth indicators at national and regional levels. This index therefore assesses the progress made by the respective countries in achieving financial inclusion according to their national development goals and strategic foci. The index in addition gives an opportunity to compare progress across countries in the Sub-Saharan Africa region.

About Micro Small and Medium Enterprises (MSMEs)

Micro Small and Medium Enterprises also known as MSMEs account for most business entities worldwide contributing between 60% and 70% to employment and 50% to 60% of GDP. Their contributions have empowered communities by creating employment opportunities and in some cases addressing challenges at the local level through social entrepreneurship where businesses positively impact culture, environment, communities and livelihoods. Micro enterprises typically have 1 to 9 employees, small enterprises 10 to 49 employees and medium enterprises 50 to 249 employees, although the specific definition will vary by country and the state of industrialisation. In Sub-Saharan Africa (SSA), most countries will typically consider entities with up to 50 employees as medium-sized enterprises. SSA has approximately 44 million MSMEs many of them run by women and youth and up to 60% may be found in the informal sector.

Definitions:

Financial Inclusion is the term used to refer to the access individuals and businesses have to useful and affordable financial products and services that meet their needs whilst being delivered to them in a responsible and sustainable manner. Such products and services may include all financial transactions such as bill and other payments, savings and investments, credit, insurance and access to loans or pension facilities (World Bank, 2023).

Traditional sources of inclusion include the more familiar sources of financing such as banks, microfinance institutions, insurance agents and investment platforms and mobile money. Digital transactions include those transactions conducted on digital platforms accessible via the internet.

Financial technology (Fintech) refers to the use of technology to automate and improve traditional financial services and processes including products and services such as online banking, mobile payments, peer-to-peer lending, digital wallets, and financial management tools (Statista, 2024). Ordinarily, fintech uses advances such as blockchain, artificial intelligence, deep learning, machine learning and big data configurations to develop products that are best fit for customers. According to Statista (2024) Fintech is comprised of:

1. Digital payments composed of digital commerce, Mobile POS payments and digital remittances.
2. Digital capital raising namely crowdfunding, crowdlending, crowd investing and marketplace lending.
3. Digital investments which can be carried out by Robo advisors, Neo brokers.
4. Neo banking which are digital-only banks without a physical presence.
5. Digital assets which are Cryptocurrencies, Non-Fungible Tokens (NFTs) or Decentralized Finance (DeFi)

Formal inclusion refers to the access that a user will have to financial products and services from sources regulated by the government or other designated national authority such as banks, microfinance institutions, insurance agents and investment platforms.

Informal inclusion refers to the access that users will have from unregulated sources i.e., sources that are not monitored or controlled by Government entities and these could include informal savings and lending groups (ISALS), friends, and family.