Mastercard and its partners N-Frnds, SGeBIZ and Finastra have formed an alliance with the support of the Asian Development Bank (ADB) to create technology solutions to drive greater digital efficiency across the retail supply chain in Asia and increase wholesalers’ access to credit.
“These unprecedented times underscore the importance of building an inclusive, sustainable digital economy, including through the application of technology to digitize trade, which can make it easier for small and medium-sized businesses to participate in global supply chains,” commented Michael Froman, Vice-Chairman and President, Strategic Growth for Mastercard. “Innovative partnerships like this one can support the agility and resilience of supply chains, accelerating access to finance and improving efficiency.”
The global pandemic and accompanying economic impact have severely disrupted supply chains and trade networks, particularly for small and medium enterprises (SMEs) that account for 90% of all global businesses, employ about half of all workers and deliver more than half of GDP.
The pandemic has also reduced control over cash flow and access to credit by SMEs. Even before COVID-19, the ADB estimated there was a $1.5 trillion funding gap in 2018, with smaller businesses most impacted. The International Chamber of Commerce estimates a potential $2 trillion to $5 trillion shortfall in trade financing through 2021 if demand returns to the global economy.
As a result, it is vital for the public and private sectors to come together to enable a faster and more efficient shift towards digitalization for SMEs across global supply chains, trade and access to financing. Mastercard, in line with its broader commitment to bring 1 billion individuals and 50 million micro and small businesses into the digital economy, has responded by developing a collaborative market-leading solution with SGeBIZ, Finastra and N-Frnds. The program will start in Indonesia with 500 retailers and aims to build to 5,000 retailers by the end of Q1 2021.
“COVID-19 has had an adverse impact on the global supply chain and these collaborative solutions are critical to ensuring grocery stores stay stocked, pharmacies have access to medicines and people can buy the daily goods they need,” said Safdar Khan, Divisional President, SEA Emerging Markets Mastercard. “Mastercard is proud to work with likeminded partners to integrate digital payments with the flow of commerce to deliver solutions for SMEs that help them navigate today’s environment and thrive in the future.”
“ADB has been working closely with the Government of Indonesia in its efforts to alleviate the impact of the coronavirus disease (COVID-19) pandemic, including through the $1.5 billion financing approved in April 2020. Our partnership with Mastercard and its alliance partners in the pilot digital supply chain project will provide critical access to finance to affected MSMEs and immediate assistance to keep the food and essential goods supply chain running,” said Ahmed Saeed, Vice President for East Asia, Southeast Asia and the Pacific, Asian Development Bank.
The results of the alliance are a technology solution that provides two key benefits:
1. Wholesaler access to credit: Mastercard will leverage supply chain data from N-Frnds, SGeBIZ’s digital procure-2-pay platform and other sources to partner with Finastra and its Trade Bank customers to automate access to working capital finance.
The collaboration will increase the digital data available to assess creditworthiness and create new models to evaluate it. Access to the resulting lines of credit will enable wholesalers to react more quickly to upcoming promotions, increase their inventory levels and build their businesses.
“One of the most fundamental problems for SMEs and micro businesses across Asia is access to finance,” said Simon Paris, CEO, Finastra. “Without credit, financially excluded businesses become caught in cycles that restrict their capacity to grow and leave them underprepared for the effects of market disruption. Technology is the enabler to tackle financial inclusion challenges. As part of this collaboration, we are able to drive change to bring positive outcomes, through digital transformation and innovative new lending pathways.”
2. Fully digitalized marketing campaigns: Through integrating digital payments and supply chain data with promotions, FMCG trade spend can be allocated more efficiently with better visibility and inclusion of SME retailers.
The alliance will leverage N-Frnds’ mobile solution - which optimizes logistics and operations by connecting FMCG companies with wholesalers for placing orders, coordinating deliveries and monitoring inventory levels - to better communicate upcoming promotional efforts between suppliers and wholesalers.
“We are excited to join N-Frnds, our strategic partner for the last mile in this new initiative to digitalize and streamline trade financing and promotions in traditional markets. We believe that this new collaboration will enable us to lead the transformation of value chains in Indonesia, both by extending credit and ensuring that our promotional spend is significantly more effective and enjoyed by the four million grocery stores in Indonesia,” says Kadir Gunduz, President Director, Coca-Cola Amatil Indonesia.