Mastercard and its partners N-Frnds, SGeBIZ and Finastra have joined forces with the Asian Development Bank (ADB) to get working capital finance to small-scale businesses across Asia through a new technology-based solution.

The collaborative project, which Mastercard says will creates a new “digital pathway to credit” for SMEs, will enable Finastra and its trade bank customers to automate access to working capital finance in the last mile of retail supply chains in the region. Initially starting in Indonesia with 500 retailers, the programme is expected to roll out to 5,000 retailers by the end of the first quarter of 2021.

N-Frnds, a multi-product distribution network, will provide input from its mobile solution – which optimises logistics and operations by connecting fast-moving consumer goods (FMCG) companies with wholesalers for placing orders, co-ordinating deliveries and monitoring inventory levels – to better communicate upcoming promotional efforts between suppliers and wholesalers.

SGeBIZ, a Singapore-based procure-to-pay platform, will provide supply chain data while assisting SMEs to digitalise their procurement and payment journeys.

Meanwhile, the ADB will provide financing support for the pilot programme, alongside stakeholder engagement with relevant authorities and counsel on longer-term scale-up opportunities.

“ADB has been working closely with the government of Indonesia in its efforts to alleviate the impact of the coronavirus pandemic, including through the US$1.5bn financing approved in April 2020,” says Ahmed Saeed, the ADB’s vice-president for East Asia, Southeast Asia and the Pacific. “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.”

According to Mastercard, this 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,” says Simon Paris, CEO of 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.”

This agreement follows Mastercard’s broader commitment to bring a billion individuals and 50 million micro and small businesses into the digital economy as a means to build greater resilience. Speaking during a keynote interview at this week’s GTR Asia Virtual 2020, Michael Froman, vice-chairman and president of strategic growth at Mastercard, outlined the importance of digitisation in enabling small and medium-sized businesses to participate in global trade.

“Moving to the digital economy and becoming fully digital creates an opportunity for SMEs to become part of global supply chains in a more efficient manner. Digitising payments, or procure to pay capabilities, are all steps towards becoming resilient. Because otherwise when there is a downturn, it’s the SMEs that are likely to bear the brunt. “