The United Nations Development Programme (UNDP), Monetary Authority of Singapore (MAS), and key partners collaborate to launch the Universal Trusted Credentials (UTC) initiative, aiming to enhance MSMEs’ access to financing globally.

In a collaborative effort, the United Nations Development Programme (UNDP), Monetary Authority of Singapore (MAS), Bank of Ghana (BoG), Global Legal Entity Identifier Foundation (GLEIF), and the SME Finance Forum1 have unveiled a groundbreaking initiative known as Universal Trusted Credentials (UTC). The initiative, introduced to address the challenges faced by micro, small, and medium-sized enterprises (MSMEs) in accessing financing, particularly in the context of cross-border opportunities, aims to revolutionize the landscape for MSME financing.

MSMEs, constituting up to 90% of businesses and 70% of employment globally2, encounter significant hurdles in securing affordable finance for business growth3. The UTC initiative proposes a comprehensive framework for creating trusted credentials that assess an MSME’s financing worthiness based on both traditional and alternative data sets.

The initiative focuses on three key pillars:

  1. Source Data: Gathering information from diverse sources such as utility providers, trade platforms, national registries, and payment history, providing a holistic view of an MSME’s financial standing.
  2. Derived Data: Utilizing additional indicators like an MSME’s commitment to upskilling and past repayment behavior to derive an “intent to pay” track record, enhancing confidence for financial institutions to provide small-value loans.
  3. Trusted Data Providers: Collaborating with central banks, financial institutions, and multilateral agencies to identify and vet trusted data sources for the UTC.

The UTC initiative aims to bridge the financing gap faced by MSMEs, estimated at US$5.2 trillion annually4. Efforts will concentrate on capacity building for MSMEs, improving data access, and fostering collaborations in key emerging markets.

The next steps include pilot testing in Ghana, enhancing the UTC platform for a broader set of alternative data, and working with central banks and financial institutions in other emerging markets for cross-border testing. Additionally, collaboration with international partners will contribute to developing a common UTC standard to ensure global interoperability.

Source – MAS & UNDP