Ethiopis Tafara, Regional Vice President at the IFC, has put data at the center of the case for closing Africa’s small business financing gap. In a thought leadership piece on LinkedIn, he wrote that change requires better information so investors can price risk accurately. “Digital platforms, mobile banking, alternative data, and advanced credit analytics now allow financial institutions to reach MSMEs efficiently and profitably,” he said.
Across much of Africa, the small shop, the growing supplier, the family-run trading business is not a footnote to the economy. It is the economy. Yet for the people behind those businesses, the hardest part of scaling up is often not finding customers or staff. It is finding the money to grow. According to the International Finance Corporation, small and medium-sized enterprises make up more than 90% of African businesses and generate around seven in 10 jobs, but they face an estimated $331 billion financing gap in sub-Saharan Africa. That shortfall is felt in delayed orders, stalled expansion plans and opportunities that pass by.
For the owners of these businesses, the promise behind Tafara’s statement is concrete. Embedded finance, as the concept is known, could turn lending from a product that must be sought out at a bank branch or through a loan application into a service woven directly into the digital tools a business already uses every day. Instead of filling out forms, a trader’s own transaction history could speak for them, helping lenders assess enterprises that conventional credit models struggle to serve.
The catch is that this vision rests on foundations many African markets do not yet have. Reliable digital infrastructure, consent-based data sharing, strong cybersecurity controls and regulatory frameworks that permit responsible alternative underwriting are all prerequisites. Across the continent, infrastructure and institutional capacity remain constraints, which means the businesses that stand to benefit most are also those waiting longest for the conditions to be met.
Meanwhile, that gap between promise and delivery is visible in the plans of global software companies, for whom Africa’s vast SME base represents a major growth opportunity. The most compelling prospects lie where accounting and enterprise resource planning platforms evolve into embedded finance platforms, using business data to connect small firms to working capital, insurance, payments and credit. Success, however, may depend on localization, partner ecosystems, affordable pricing and infrastructure resilience. Global technology companies with a footprint in Africa, the argument goes, must design with the continent in mind rather than treating it as an afterthought.
Sage offers a test case of how this might work, though not yet in Africa. The company recently announced a partnership with Mastercard to build embedded bank accounts and cards into its software, starting in France and then expanding across the European Union. Derk Bleeker, Sage’s Chief Commercial Officer, said in a statement: “We’re developing services that bring more of those everyday activities into the software they already use to run their business.” He told Forbes Africa that companies can move money inside the software without connecting to an external bank, and that embedded accounts and cards capture every transaction, which is precisely what investors need.
For African small business owners, the significance of that detail is hard to miss. A complete digital record of transactions is exactly the kind of evidence that could convince a lender to back a business the traditional system overlooks. Yet Sage has reported no timeline for Africa, despite its stated intent to scale and its awareness that the continent is its fastest-growing region from a small business perspective. That leaves customers on the continent with an unanswered question: when will the same capabilities reach them?
Until there is an African rollout commitment, better transaction records remain a possibility rather than a reality, and with it, the potential financing benefit for millions of business owners stays exactly that, potential.