As we look beyond financial access toward unlocking real economic opportunity for the last mile market, a surprisingly basic constraint persists: the device. Early financial inclusion efforts rightly focused on expanding access, ensuring that individuals and small businesses could open accounts, send and receive payments, and store money safely. These efforts laid the groundwork for today’s digital financial ecosystems.

Across sub-Saharan Africa, digital financial services, in particular mobile money, have brought millions of people into the formal financial system over the past decade, transforming the way households and businesses save, send, receive, and manage money. According to the World Bank's Global Findex, account ownership in the region rose from just 23 percent of adults in 2011 to 58 percent of adults in 2024, representing the fastest growth of any region globally.

Digital payments have followed a similar trajectory, with more than half (51 percent) of adults in the region now making or receiving digital payments. In practice, activities such as paying a supplier, receiving customer payments, sending money to family members, or receiving government transfers through a phone have become part of everyday life across many African markets.

Yet progress beyond payments remains wanting.

Access to and usage of services such as savings, credit and insurance, particularly in digital form, remain uneven across many markets.

Greater access alone does not automatically translate into higher incomes, stronger businesses, or improved resilience. This explains the shift in inclusive finance discourse from financial inclusion to financial health and economic opportunity.

For households and businesses, the real opportunity lies in using digital tools productively: accepting digital payments from customers, accessing working capital, participating in online marketplaces, tracking transactions and managing cash flow, and reaching new customers through digital channels.

In short, it is about using digital tools not just to transact, but to grow. And at the center of this transition lies a critical enabler: access to the device that makes all of this possible.

This constraint is visible in the everyday experience of small businesses trying to participate in the digital economy.

Grace Limpe, a honey processor in Gulu in Uganda, has watched her community try to close the digital divide in real time. As a representative of the Uganda Small Scale Industries Association in Gulu, she regularly engages with entrepreneurs and business owners across northern Uganda.

Her perspective is both personal and practical: she runs her own business online and sees which entrepreneurs are able to do the same – and which remain excluded.

Beyond connectivity, access to an affordable smartphone can determine whether MSMEs can turn digital services into real economic opportunities. Credit: UNCDF.

“In Gulu, many small businesses are trying to reach customers through online platforms. But smartphones are still expensive. Some people are not yet there, and without a smartphone, you really can’t advertise your business,” says Limpe.

Her experience illustrates a broader challenge: digital services may be available, but that does not mean businesses can access or use them effectively. For many MSMEs, the device is the gateway to the wider digital economy – from digital payments and online marketing to access to finance and new markets.

The device constraint at the last mile

At UNCDF, after nearly a decade of advancing digital financial solutions for the last mile, one constraint has remained consistently visible: device ownership.

This becomes even more pronounced when we move from basic access to meaningful usage, especially for micro and small businesses. Participating in the digital economy increasingly requires, at minimum, an entry-level smartphone to access and use digital payments, e-commerce platforms, business applications, digital credit, and online markets.

Data from selected African markets highlights a substantial smartphone ownership gap between urban and rural adults.

Source: GSMA Consumer Survey, 2024.

For millions of low-income households, farmers, traders, and small business owners, the smartphone remains an important missing link for meaningful digital economic participation. As digital ecosystems become increasingly smartphone-centric, device affordability is emerging as a major constraint to achieving inclusive digital transformation and access to finance.

Through UNCDF’s flagship MSME financing programme, FinWise, we set out to directly address this constraint in partnership with the Mastercard Foundation under its Young Africa Works strategy which aims to expand access to dignified and fulfilling work for young people.

Our starting point was simple: device access is a prerequisite for the digital transformation of MSMEs. Without such tools, many last-mile households and micro-enterprises remain structurally excluded, even where digital networks and services exist.

From access to affordability: the device financing thesis

UNCDF initially approached the challenge as one of device affordability. The working thesis was that device financing could address a binding constraint to last-mile inclusion by enabling aspiring entrepreneurs and micro and small businesses to participate in the digital economy where connectivity and services were already available.

UNCDF began testing how to absorb risk for market actors offering financed devices to last-mile businesses. Early implementation, however, revealed that de-risking was only one part of the problem.

Through device financing, UNCDF aims to help women access the tools they need to connect, grow, access finance, and thrive. Credit: UNCDF.

The real challenge: a fragmented market

Device access is not simply a financing problem. It is a market coordination problem. When UNCDF published its first call for applications for market players to provide last mile device financing for MSMEs, the market response revealed significant gaps in the availability of integrated device-financing solutions.. Those that applied provided partial solutions. Across the ecosystem, key actors operate in silos, limiting the ability to deliver affordable, financed devices at scale.

Distributors don’t finance. Device distributors largely operate as traditional traders, focused on importation and retail, reliant on cash sales, and lacking credit management capabilities. Embedding financing into device sales is simply not part of their model.

Financiers don’t distribute. Lenders, on the other hand, focus on credit underwriting, portfolio management and digital lending. They are not structured or incentivized to manage procurement, logistics, last-mile distribution or after-sales support. The result is that those who can finance do not distribute, and those who distribute do not finance.

The last mile is not commercially obvious. Existing device financing models are largely urban-centric. Serving rural MSMEs presents real challenges: high distribution and servicing costs, low customer density, smaller transaction sizes and uncertain repayment profiles. For many providers, the business case is not immediately compelling.

Distribution costs remain a structural barrier. Reaching last-mile customers significantly increase acquisition, verification, and servicing costs. This explains the persistent urban bias in device financing.

Enterprise Support Organizations (ESOs) are not distributors. While enterprise support organizations (ESOs) play a critical role in identifying MSMEs, building digital skills and facilitating onboarding, they are not generally equipped to manage device procurement, financing structures, logistics or asset management.

Data gaps constrain inclusive lending: Many MSMEs lack formal credit histories. Alternative data such as mobile money usage, telecom data and transaction histories can help, but data sharing frameworks remain weak; ecosystems are not well integrated, and many users still generate thin data trails. This limits scalable credit scoring.

Telecom operators prefer to enable, not lend: telecom operators are critical ecosystem players, but they are not lenders. Their preference is clear: regulated financial institutions provide credit while telecoms provide reach, data, and distribution.

UNCDF’s engagements with telecom providers in Uganda pointed to a consistent preference for partnering with licensed financial institutions to provide credit, while telecom operators contribute platforms, customer reach and brand endorsement.

Adapting the UNCDF approach: from financing to market building

These insights required our approach to evolve from only supporting individual affordability solutions to facilitating coordination across the wider market. This approach includes:

1. Connecting fragmented actors:
   Building partnerships across device distributors, financiers, telecom operators and digital platforms to create integrated, end-to-end models.
2. Leveraging existing last-mile networks:
   Using agent networks, cooperatives and MSME support organizations to reduce customer acquisition and distribution costs.
   In a partnership with one of the telecom providers, UNCDF orchestrated a partnership between the telecom provider and a last mile distribution provider to use the innovative “digital community entrepreneurship” model to reach underserved las- mile customers in northern Uganda and West Nile.
3. Piloting new financing models, de-risking innovation for the last mile:
   UNCDF is working with market actors to pilot approaches such as pay-as-you-go financing, buy now, pay later arrangements, and bundled device and working-capital loans that allow last mile MSMEs to acquire devices without large upfront payments. These pilots can reduce risk for private sector actors, test models with underserved groups, including women in agricultural value chains, and build evidence for alternative credit-scoring approaches. Models that prove commercially viable can then be scaled by market actors.

For example, for credit scoring purposes, UNCDF working with one of the mobile network operators whitelisted certain customer segments – that would otherwise not pass the credit scoring – and de-risked the lenders/distributor to be able to test and pilot with this segment. This was tested with women, in particular those in agri-value chains. The core lesson is clear: device access is not just about affordability; it is about aligning an ecosystem. Solving this challenge requires structured collaboration, with telecoms providing reach and engagement, financiers providing credit, distributors supplying devices, and platforms enabling payments and data. No single actor can solve this alone.

The way forward

For development actors, attention should go, beyond financing towards market facilitation: bridging gaps between distributors and financiers, reducing risk for private sector partners, testing scalable models, and expanding access to devices for underserved MSMEs.

Ultimately, to move from access to creating opportunity, the right device is a prerequisite.