Micro and Small Enterprises (MSEs) are crucial drivers of economic growth in emerging markets, yet there is a persistent financing gap that restricts their access to essential capital. This financing challenge affects their ability to scale, manage cash flow, and build resilience against economic shocks, stifling both growth and sustainability.

One of the core drivers of the financing gap is that the diversity among MSEs is poorly understood. This lack of nuanced understanding often results in MSEs being grouped as a singular category, resulting in a one-size-fits-all approach to financing that overlooks the distinct financial and non-financial needs of different segments within the MSE sector.

To improve the segmentation of MSEs and better identify groups with shared realities and needs, CGAP has initiated a multi-phase research project focused on understanding the specific needs of MSEs, particularly women-led nano and micro enterprises. As part of the first phase, CGAP commissioned Cenfri to conduct a global literature review on existing segmentation frameworks and a review of existing datasets and information on the financing landscape for MSEs in Kenya, Uganda, and India.

The report, and accompanying data library, takes stock of existing segmentation approaches, recommends which dimensions and variables should be used for segmentation purposes and sheds light on the MSE and MSE financing landscape in each of the three focus countries. Our review suggests that existing data on MSEs, particularly those classified as ‘nano,’ is limited.

Cenfri is collaborating with CGAP on the next phases of this project, which include validating the proposed segmentation dimensions, conducting an in-depth analysis of MSE financing market dynamics and needs, and performing a market sizing exercise.