World Bank, Visa Launch AI-Driven Finance for Women MSMEs

The World Bank Group and Visa Foundation are announcing a global effort to build a more resilient and empowered women-led small business ecosystem by increasing access to finance, digital tools, and business education and training and improving financial ecosystems throughout emerging markets. It will be initially applicable for women entrepreneurs in India, South Africa, Nigeria, Colombia and Mexico where access to capital and financial services for women entrepreneurs is a problem.

The partnership will work with local financial institutions, governments, microfinance institutions and non-profit institutions to develop financial programs to meet the needs of women entrepreneurs. The project is designed to address one of the most critical issues affecting women entrepreneurs - lack of finance to invest in their businesses, create jobs and grow businesses.

Micro, small and medium-sized enterprises (MSMEs) are a substantial contributor to the number of businesses and employment around the world, especially in developing economies, where they are an important driver for economic growth and poverty alleviation. However, the World Bank noted that a lot of these businesses continue to experience difficulties accessing affordable financing, business development assistance and digital financial services, including for women entrepreneurs.

Key Highlights:

• Supports women-led MSMEs with finance, digital tools and training
• Uses AI and digital finance to improve access to credit
• Partners with local organizations to strengthen women entrepreneurship

The program is dedicated not just to access to finance but also to digital innovation, in addition to the traditional financing frameworks. It seeks to inspire financial institutions to leverage alternative data sources, digital distribution channels and digital technology solutions that may help them improve their knowledge and responsiveness to underserved entrepreneurs.

Innovation is essential to improve financial inclusion, as the World Bank has said in its blog post. It, it said, is innovation – digital tools and new sources of information opening the way to financing for women.

The initiative also acknowledges the unique economic and regulatory context where women entrepreneurs work. It does not mean that the programme will not be a one-size-fits-all solution, it will be about locally relevant solutions. For example, financial models that are successful in India may require extensive changes to be successful in Nigeria, South Africa, Mexico or Colombia.

Technology will be a key element in the program. The partnership will help to foster credit assessment solutions that incorporate AI and digital support platforms and financial products for small business realities. The measures are to remove the obstacles often faced by women entrepreneurs for availed formal credit.

Early activities include gender bonds pilot project in India on credit enhanced gender bonds. The model aims at creating an institutional framework for longer-term financing of financial institutions, which could be channeled into financing for women entrepreneurs.

The partnership gives emphasis also to the capability of business skills and digital skills. In Latin America, Visa Foundation has already supported initiatives for women entrepreneurs to build their digital skills, as well as to provide them with business tools and other useful resources to support their business growth along the way.

The project is closely linked to broader efforts in Nigeria to improve access to finance for MSMEs which contribute significantly to the country's economic activity while remaining less likely than their more successful counterparts to be able to access affordable formal sources of credit. One of the groups which are most impacted by these financing challenges are women-owned businesses.

Ultimately, the World Bank Group and Visa Foundation want to establish stronger ecosystems that will help women entrepreneurs — by combining international expertise and local networks, they said. It will allow more women entrepreneurs to scale up their businesses, create jobs and contribute to sustainable economic development in emerging markets, by improving access to capital, technology, digital skills and financial services.