Collective Intelligence is created when people work together, often with the help of technology, to mobilise a wider range of information, ideas, and insights to address social challenges.

Take a travel back in time to 2 or 3 centuries ago when mobilizing ideas and a wide range of information from one generation to another was done around the campfire. Often, these were stories with information that addressed day-to-day community challenges at the time. Such information was passed on from generation to generation through “word of mouth”, revealing the place collective power has always occupied in our societies and will always do, to achieve group or community success.

As 21st-century challenges have become so complex, and fast-paced, and with the urgent need to match actions to the speed of challenges faced around the globe today, modern methods of tapping from collective power have continuously emerged over the years, now coined “collective intelligence” which could reflect a diverse group or team seated around a table in a room, trying to put ideas together for solutions or a solution to a challenge.

Such seats around the table have replaced the campfires in the days of old, tapping from an intelligence which generates real-time information and data, with proof on informing programmes and accelerating systematic change.

While reflecting on the power of collective intelligence, we acknowledge the strength in collective action for development purposes, transparency and accountability, complementarity, and decision-making, and most especially for a holistic approach to programming and development.

In testing how much collective intelligence brings to the development table, UNDP Cameroon, with the support from its Accelerator Lab leverages four key hypotheses to sense methods and techniques which enhance and facilitate access to finance for MSMEs within the framework of the Country Office (CO) Rapid Financing Facility (RFF) project.  

The hypotheses derived were based on the following challenges:

Challenge 1: Access to real-time information on available financial products, and or opportunities is limited towards MSMEs.

Hypothesis 1: If MSMEs are linked to financial institutions for an information session, their chances to fund acquisition will increase and their knowledge of available financing opportunities will improve.

Challenge 2: MSME dependence on traditional/classic finance mechanisms hinders product scale-up and sustainability

Hypothesis 2: If MSMEs are connected to innovative finance actors and mechanisms, over-dependence on traditional financing mechanisms and approaches will reduce while MSMEs will gain enhanced access to innovative finance opportunities and services.

Challenge 3: Credibility and guarantee are a great concern for financial institutions prompting their reluctance towards grants to MSMEs.

Hypothesis 3: If MSMEs have institutional backup from the Government and development actors including UNDP, then grant procedures will be facilitated and more accessible.  

Challenge 4: Financial institutions have limited information and knowledge on MSME activities.

Hypothesis 4: If financial institutions have real-time information and increased knowledge about MSMEs activities, the perceived risks of activities will be reduced and their willingness to finance MSMEs will increase.

The Added Value of UNDP Cameroon Rapid Financing Facility Programme to partner MSMEs in the Agri-business Sector

Local MSMEs in Cameroon face multiple challenges including lack of information, lack of capacity and knowledge regarding business development, and limited access to finance and technology, especially for women and youth with respectively 53% and 52% who Lack access to formal financial services and products.

In addition, the average overall effective credit interest rate to MSMEs is assessed at 10.5% compared to 5.5% for large companies based on a UNDP Cameroon Evaluation Study on Development Financing. The socio-economic impact assessment study carried out by UNDP on COVID-19 in April-May 2020, revealed that the main difficulties faced by local enterprises are the decrease in demand and supply, and access to finance.

Through the RFF Programme, partner MSME benefited from an integrated range of financial and non-financial supports including capacity building, coaching/mentoring through a local incubator, grants in the forms of equipment provision, improved product branding, marketing, and access to market, etc. Despite the good results achieved by the Programme, access to finance by MSME has remained a key challenge throughout the implementation.

The Accelerator Lab took a deep dive to capture insights from a financing matchmaking event organized within the framework of achieving key RFF Programme components to connect beneficiaries to financial institutions and enhance information on available financial opportunities offered by these institutions. Insights captured from these sessions revealed the following:  

• Information-related challenges in accessing finance to MSMEs are two-fold; MSMEs are hardly aware of available financial opportunities and related information, meanwhile, on another note, financial institutions lack or have little information on available market-ready products suiting or adapted to the financing demands or strategies of their respective institutions.

• The Accelerator Lab observed that beneficiaries were over-dependent on classic finance mechanisms compared to existing innovative finance mechanisms which limited their chances to obtain funds for business development.

• Product standardization and certification for MSMEs remain critical to unlocking financing, requiring UNDP’s continuous support to promote access to markets and competitive value chains in the face of national socio-economic challenges. We observed the connection that exists between product quality and consumer trust, requiring continuous and endless efforts from UNDP to position MSMEs at the centre of socio-economic development.  

• Support provided to MSMEs by development institutions like UNDP sometimes promotes the reinforcement of informal markets or informality in cases where training and equipment support provided to MSMEs without due procedures followed to ensure product standard and quality control remain challenging to the government in terms of promoting competitive markets.

• Lack of financial Guarantee/collateral from the Government or development institutions like UNDP supporting MSMEs was at the centre of discussions from both financial institutions and beneficiaries who emphasized that access to finance would be more efficient if UNDP stood as a backup for MSMEs towards financial institutions.

To a good number of the MSMEs who were present at the networking and information-sharing event, the Lab noted their enthusiasm to leverage such an opportunity which will connect them to potential investors and increase their chances of acquiring funds.

Preoccupied by their challenges of not being able to respond to guarantee-related demands from banks or micro-finance institutions, MSMEs benefited information on alternatives to minimizing or bypassing this burden. Amongst the mentioned methods was the “solidarity guarantee” option whereby a different party, not necessarily the entrepreneur could provide the necessary support to financial institutions required for an entrepreneur to acquire funds. Other ways discussed by innovative finance actors required MSMEs to leverage innovative finance mechanisms such as “Equity Investment or Venture Capital” to avoid loans. Insights generated also revealed interesting benefits in the Islamic finance sector, which was considered more inclusive and not based on interest, but rather on ethical values.

The financing matchmaking events organized contributed to reducing the information asymmetry between MSMEs and financial institutions and opened the way for improved access to finance for beneficiaries

When the Accelerator Lab sought to know the opinion of beneficiaries on their chances of acquiring financing after the RFF networking and information-sharing event, a good number of beneficiaries were within the averages of high and medium chance, while about 12% felt their chances were low.