It is widely believed that the growth of micro-, small and medium-sized enterprises (MSMEs) can catalyze the development of economies such as those in Sub-Saharan Africa. Due to financial institutions’ challenges in identifying where MSMEs are concentrated, however, MSMEs may not have access to the tailored financing and financial products that could help them become more successful.
The authors argue that individuals and MSMEs tend to use the same digital financial services (DFS) for personal and business needs, due to a lack of availability of business-specific DFS. However, by analyzing DFS transaction data, a distinction may be made between usage by individuals and MSMEs, allowing for the identification of MSMEs. By combining this analysis with data from MSME surveys, the authors seek to answer the following questions: 1) Can businesses be identified within the customer base?; 2) Can MSMEs be further segmented into tiers?; and 3) If yes, what can we discern about the mobile money usage and other aspects of these MSME segments.
The authors conclude that “MSMEs with an individual mobile money subscription can be identified based on their mobile money transaction behavior… [and] further sub-segmented into meaningful MSME tiers.” This is done by evaluating the sizes of transactions, number of transactions, transaction types and account balances. Furthermore, “profiles and patterns emerge that help to sub-segment MSMEs based on their usage of mobile money, their business characteristics, and their financial needs.” The authors suggest that financial institutions use these kinds of analyses to improve the suitability of financial products that they market to MSMEs.