SMEs are a central part of the Mexican economy. With the materialization of nearshoring in Mexico, two challenges stand out: these new companies’ need for suppliers and the need to advance the financial digitization of Mexico.
It is estimated that the nearshoring wave could generate an annual income of US$35.3 billion in the country, derived from the export of goods. So far this year, foreign investment has increased by 41%, with most investors in Mexico coming from the US, according to Ualá Bis. The five industries that receive the most investment are manufacturing, media, financial services, logistics and transportation and mining.
Supporting this increased investment demands resources. Numerous financial technology solutions have emerged as a result of two very specific characteristics of the Mexican market: the large predominance of SMEs in the Mexican economy and, paradoxically, the lack of access to financing and financial instruments for these units. "The economy is built on MSMEs; 37% of jobs are generated thanks to these companies. Of course, there are still many challenges to the development and growth of SMEs in the country, including the lack of financial inclusion. There is a gap in digitization that we must overcome. This digitization has great benefits: 20% of SMEs accept debit or credit cards, while 75% of these companies claim to have increased their monthly income and 72% claim that the average ticket has increased with electronic payments," said Maia Eliscovich, Vice President, Ualá Bis.
According to Ualá Bis, three out of every 10 Mexican companies have seen an increase in their production in 1Q23. However, Mexico is lagging in terms of financial digitization, in parallel with the lack of access to finance for SMEs. Mexico has one of the lowest levels of digitization in payments in the region at 23%, well below Chile's 78% and even Argentina's 59%. Mexico also has one of the largest credit gaps, with 35% of companies lacking access to financing. Guided by a digital DNA and recognizing the challenges faced by SMEs at the banking level, Ualá Bis emphasizes the importance of addressing this sector, especially at such a critical moment for the Mexican economy.
Ualá Bis explains that with nearshoring, it is expected that companies that are relocating will need at least 150 suppliers at the direct and indirect levels and even more at the ecosystem level. To address this, the formalization of Mexican companies, as well as digitization and access to financial tools, becomes central to maintaining competitiveness upon the arrival of new companies. "Oftentimes, digital transactions become the differentiator to win these new enterprises as clients," explains Eliscovich.