Tech is the passport for Africa’s small businesses

It is obvious that large enterprises depend heavily on technology to run operations, supply chains and customer interactions. Small and medium enterprises (SMEs), not so much, and especially not across the African continent.

While SMEs in more developed markets tap into high-tech with ease, SMEs in Africa must overcome both technological challenges and infrastructure limitations, forcing on them a gradual approach to adoption. But the situation is not hopeless, a new study has found.

“Levelling the SME playing field”, a research study conducted by World Wide Worx for Vodacom across seven African countries, shows that, by collaborating with other small businesses, SMEs across the continent tap into their collective strengths and learnings for greater success.

This report is part of a six-part series called Africa.connected, and is based on conversations with 400 SMEs from South African, Kenya, Egypt, Ethiopia, Mozambique, Tanzania, The Democratic Republic of the Congo and Lesotho.

An overarching finding was that SME decision-makers are keenly aware of their importance. With the World Bank reporting that SMEs are responsible for more than 80% of Africa’s employment and 50% of its GDP, an almost unanimous 99% of respondents in the research echoed this sentiment.

However, they face distinct challenges, ranging from access to finance and markets to regulatory barriers, inadequate technology adoption and limited management capabilities.

“To address these stumbling blocks, strides must be made to promote financial inclusion, simplify regulation, enhance technological infrastructure, and encourage innovation,” the report finds.

The study highlights innovative approaches to changing the traditional narrative of small business in Africa, like Book Thirst, an online bookstore and mobile library that aims to transform the lives of children; and Femme Logistics, a Kenyan errands and delivery service provided exclusively by female riders.

“It is business owners and businesses like these that provide job opportunities for so many of the 1.4-billion people who call Africa home,” says Vodacom Group CEO Shameel Joosub. “These individuals and ventures are vital to the region’s development and serve as an important driver of economic growth.

“Determined to understand what these SMEs need to succeed and thrive, our latest Africa.connected report… explores the many challenges SMEs face across African markets and unpacks what needs to be done to help these entrepreneurs overcome these obstacles.

“The report also highlights the significant role partnerships and technology play in helping small businesses tap into new opportunities, better access finance, up productivity, reduce costs and enhance their competitiveness. Additionally, these digital solutions and tools open possibilities for entrepreneurs and small business owners to connect and discuss best practices so that they can learn from each other’s experience.”

However, this must all occur in the context of the key finding of the study: that SMEs must embrace modern technologies to stay relevant.

“These technologies enhance efficiency, productivity, and customer engagement. By leveraging e-commerce platforms, for example, SMEs can expand customer bases, access valuable data insights, and reduce customer engagement. Technology solutions can also boost efficiency, reduce costs and enhance competitiveness, while also enabling these businesses to expand their reach.”

If that sounds like the same recipe that makes large enterprises more competitive, it is no coincidence. In effect, big business has proven the effectiveness of the tools, but also made them more effective by test-driving and proving them, and pushing developers and software vendors to keep improving them. As they become more powerful and more intuitive, the cost of adoption tends to come down too, since less training and skills are needed.

Small business across Africa has got the message: respondents to the survey were almost unanimous that technology has had a positive effect on business growth and business efficiency, while more than two thirds said it enhanced their competitiveness and customer service.

* Arthur Goldstuck is founder of World Wide Worx, editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee. He led the research for the “Levelling the SME playing field” study.