How digital connectivity can empower MSMEs

Digital connectivity is not universal, which is an obstacle to business.

Digital connectivity is not universal, which is an obstacle to business. Image: Desola Lanre-Ologun/Unsplash

Ling Hai
President, Asia Pacific, Europe, Middle East & Africa, Mastercard
Mats Granryd
Chairman, Vattenfall
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Society and Equity

  • The world is more connected than ever before: 57% of people use mobile internet. Yet 3 billion people, largely in low- and middle-income countries (LMICs), remain unconnected.
  • Increasing the connectivity of micro, small and medium-sized enterprises (MSMEs) to the internet and the broader digital economy is an important step towards achieving the UN Sustainable Development Goals, but it has not received the attention it deserves.
  • Here, we outline the challenges and opportunities of getting more MSMEs in LMICs online and engaging in online trade.

According to the United Nations, micro, small and medium-sized enterprises (MSMEs), both formal and informal, make up over 90% of companies worldwide, accounting for 70% of total employment and up to 50% of global GDP. But we know that numbers don’t tell the whole story. Small businesses are entwined into communities around the world. A resilient small business ecosystem means a more resilient economy.

Alongside this, over recent years we have seen that digital connectivity is essential for individuals, businesses and communities to survive and thrive. And whilst the GSMA estimates that 57% of the world’s population is online, there are still 3 billion people globally who remain unconnected, almost entirely based in LMICs.


How can digital technologies help deliver the climate goals?

This divide includes MSMEs, which face key barriers in leveraging digital connectivity. The gap is especially evident amongst micro and female-owned businesses, according to recent GSMA research (see Figure 1). Women are behind at every stage of digital inclusion. At the individual level, for example, women in LMICs are 17% less likely than men to own a smartphone, 19% less likely to use mobile internet and 28% less likely to own a mobile money account. This is significant because across LMICs mobile phones are the primary and often only way that people get online.

digital connectivity mobile internet micro-entrepreneurs
Figure 1: Mobile internet use by micro-entrepreneurs Image: GSMA 2023

The UN Broadband Commission’s Advocacy Target 6 focuses on improving the connectivity of MSMEs by 50% by 2025. However, relevant data in aggregate, or by sector, is not available to track progress, which increases the challenges of meeting an already urgent target. No data is gathered globally to determine how MSMEs are using their connectivity, nor are there studies of MSMEs that are not yet online to help guide our understanding of the current roadblocks.

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The barriers and opportunities for MSME digital connectivity

In September 2023, the Broadband Commission Working Group on Connectivity for MSMEs, co-chaired by the GSMA and the International Trade Centre (ITC), with Mastercard as an expert contributor, released the Making Digital Connectivity Work for MSMEs report.

The report outlines barriers and opportunities to MSME connectivity with a five-part framework:

digital connectivity msme

Digital connectivity has significant benefits for MSMEs, fostering access to markets and resilience, and promoting new entrepreneurial ventures. As cited in the report, 85% of enterprises using digital technologies said they increased sales as a result and 81% said the digital technologies helped them cut costs. These benefits also transcend to their economies. A recent ITU-sponsored study showed that for every 1% increase in mobile broadband penetration, GDP increased by 0.20% in developing countries.

Crucially, enterprises of all sizes also depend on a set of 'digital enablers' to turn their connectivity into further economic value. Examples of these include web hosting and cloud-based services, platforms, digital financial services and access to e-government services. While digital skills are required to use these enablers, the enablers themselves can help simplify tasks for small enterprises and may incorporate training elements. They may also provide security and data protection services to instil trust. The vibrancy of this ecosystem of supporting digital enablers is a determinant of the ability of small enterprises to reap the true scale of benefits of connectivity and be competitive online.

Recommendations for all stakeholders

Increasing MSME participation in the digital economy will require governments, international organizations, companies and NGOs to accelerate efforts towards closing connectivity gaps. This will create digital enablers to drive awareness and usage and programmatically support underserved and marginalized communities.

For example, the GSMA Digital Inclusion programmes (Connected Society and Connected Women) work with the mobile industry, governments and other key stakeholders to further increase access to and use of mobile internet, focusing on underserved population groups in LMICs. As part of these efforts, the GSMA initiated a three-year project to accelerate the digital and financial inclusion of women micro-entrepreneurs in Africa and Asia, with funding from the Bill & Melinda Gates Foundation. Following the research phase across ten markets, the team is now supporting mobile operator partners in Pakistan, Kenya and other countries to identify, develop and scale approaches to reach more women micro-entrepreneurs.

Another example is Mastercard Farm Pass, a digital platform that works online and offline to directly connect smallholder farmers to the agricultural and financial ecosystem. Smallholder farmers, especially in LMICs, are often distanced from the benefits of digital connectivity. Farm Pass provides a digital marketplace for farmers to access reliable markets and fair prices for their produce. To overcome an initial lack of connectivity and digital skills, there is a network of agents and Farmer Producer Organizations (FPOs) who work with farmers to help them access Farm Pass services. Farmers are given a functional digital identity that is tied to their harvest data and transaction history, which helps to build a digital profile for the farmer, providing improved access to financial service providers, buyers and suppliers.

Farm Pass is part of Mastercard’s Community Pass digital platform, which connects people in remote and underserved communities to service providers. Community Pass is available in a number of African countries and in India, with over 4 million smallholder farmers now counted as users. In India, tomato and carrot farmers on Farm Pass have reported that their output has increased by 20% and they have been able to receive up to 20% higher prices for their produce. A few years ago, Mastercard also committed to connecting 25 million women entrepreneurs with solutions that can help them grow their businesses, as part of a broader initiative to bring 1 billion people and 50 million small businesses into the digital economy. This milestone was reached earlier this year, ahead of the 2025 target.


Continued collaboration across key stakeholders is essential. The EDISON Alliance, which Mastercard and the GSMA are members of, is an example of this in action, with partners working together to accelerate digital and financial inclusion, close the gender divide and collaborate around investment, tools, the regulatory landscape and ways to ensure trust in technology.

Trust is also the theme of the upcoming WEF 2024 Annual Meeting, which explores opportunities enabled by new technologies – the right regulatory and infrastructure landscape is needed to ensure MSMEs gain trust in technology and embrace digital connectivity.

Greater adoption of digital technology and participation of MSMEs in the digital economy brings important economic benefits, drives the demand for digital capacity and, in turn, improves the business case for further investments in connectivity globally. However, realizing these benefits is not a given and requires increased efforts from all stakeholders. Let us all commit to helping ensure every business can thrive in an increasingly connected world.

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