Micro, Small, and Medium Enterprises (MSMEs) are critical drivers of economic growth in the COMESA region, contributing to job creation and poverty alleviation. According to the World Economic Forum, SMEs account for 95% of all registered businesses and contribute about 50% to the total GDP of sub-Saharan countries. However, despite their economic importance, MSMEs across the COMESA Member States – Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Eswatini, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia, and Zimbabwe – face significant challenges, particularly when it comes to cross-border trade. A key barrier is the financial literacy gap, which hinders their ability to understand and navigate critical financial aspects such as exchange rates, cross-border payments, and access to financial services in different jurisdictions.

The financial literacy gap is most evident when MSMEs engage in cross-border trade. Due to limited understanding of financial concepts, many MSMEs struggle with:

• Exchange rate fluctuations which greatly impact the profitability of cross-border transactions. Without proper knowledge of how currency values affect costs, MSMEs risk losing money in their dealings. Additionally, varying exchange controls across COMESA countries complicate this issue further.
• Navigating different payment systems, banking regulations, and settlement mechanisms between countries can be overwhelming for MSMEs. This challenge is compounded by a lack of awareness about the digital financial tools and platforms that can simplify these processes, leading to delayed payments and cash flow issues.
• Lack access to tailored financial services that meet their cross-border needs. The lack of information on the available options, particularly digital financial services that transcend borders, limits their ability to expand their businesses internationally.

The COMESA Digital Retail Payments Platform (DRPP) is therefore being developed under the Digital Financial Inclusion Program to streamline and enhance cross-border financial transactions for MSMEs. It specifically targets women and youth entrepreneurs, who are often excluded from mainstream trade opportunities. By addressing the unique financial challenges these groups face, the platform aims to promote inclusivity, ensuring that marginalized entrepreneurs can participate in cross-border trade more effectively. This initiative will not only simplify transactions but also empower these groups to grow their businesses, fostering economic growth and regional integration across COMESA.

The COMESA DRPP offers several unique value propositions, including:

• Ease of access to financial services for MSMEs, especially those operating at the grassroots level.
• Interoperability across national payment systems, allowing businesses to transact seamlessly across COMESA countries.
• Use of local currencies, reducing the reliance on hard currencies like the U.S. dollar and minimizing exchange rate losses.
• High security standards, ensuring that cross-border transactions are protected from fraud and other financial risks.

To maximize the benefits of this platform, the COMESA Business Council (CBC) has taken a proactive approach to enhancing financial literacy as one of the Digital Financial Inclusion Program‘s pillars. In partnership with local cross-border traders’ associations, commercial banks, fintech companies, and industry associations, the CBC has carried out extensive in-person capacity-building initiatives across the program’s eight pilot countries: Zambia, Malawi, Uganda, Kenya, Rwanda, Egypt, Ethiopia, and Mauritius. Recently, these efforts were further extended with a bonus training in Tunisia.

These training programs focus on:

• Educating MSMEs on the use of digital financial tools, such as the COMESA Digital Retail Payments Platform.
• Teaching MSMEs how to navigate cross-border payments, manage currency risks, and access financial services across the region.
• Providing insights into financial management, such as cash flow forecasting and the importance of maintaining financial records.

Additionally, the CBC has launched an e-learning academy that will serve to build the capacity of stakeholders across the financial ecosystem, including commercial banks, central banks, and fintech companies. This academy is designed to equip stakeholders with the knowledge and skills needed to fully utilise the COMESA DRPP, driving innovation and adoption in the region’s financial services industry.

The ripple effects of empowering women MSMEs with financial literacy, especially those at the bottom of the financial pyramid, are profound. In underserved communities, women often play a central role in supporting their families and contributing to community development. Financial literacy allows them to make informed decisions about their businesses, leading to better financial outcomes for their households. This empowerment, in turn, boosts local economies, contributing positively to national GDP and the region’s overall growth.

According to global studies, financial literacy among women leads to improved business performance, higher incomes, and increased savings, which can uplift entire communities. By equipping women entrepreneurs in COMESA Member States with the tools to engage effectively in cross-border trade, the CBC’s Digital Financial Inclusion Program aims to bridge the financial literacy gap, ensuring that MSMEs can fully participate in regional trade and drive sustainable economic growth.