Business

Driving Resilient Economies Through the Digitization of Small and Medium Enterprises

Published

1 year ago

February 16, 2023

Gerald Maithya

Startups Lead Microsoft Africa Transformation Office

Small and Medium Enterprises (SMEs) are a crucial part of contributing to Africa’s inclusive socio-economic growth. These businesses anchor the economies of countries and are contributing to inclusive socio-economic growth. In emerging economies, SMEs account for 40% of GDP, and generate at least 90% of new jobs.

This is even more pronounced in Africa, where more than 60% of Africa’s population is under the age of 25. SMEs account for about 80% of jobs in Africa, while the African Union Development Agency notes that up to 90% of the population in African countries such as Uganda, Ethiopia, and Kenya are employed within SMEs.

In Nigeria, SMEs account for 96% of businesses, and 84% of employment in the country, and contribute 48% of the country’s GDP, according to a PricewaterhouseCoopers report. Of these SME’s, 55% are in wholesale or retail business.

SMEs employ people, supply products and services and act as an important link in the manufacturing value chain, generating economic activity along the way. The way that many manufactured products reach consumers is through SMEs, usually through a network of small independent retail stores such as dukas and kiosks in Kenya, ojas in Nigeria, hanouts in Morocco or spaza shops in South Africa. In doing so, SMEs are the cornerstone of most economies. By enabling SMEs to grow and compete in the value chain, countries’ economies can be strengthened.

SMEs face many obstacles on the path to success

Despite the important role SMEs play in African economies, there are several challenges standing in the way of their survival and success. In fact, research indicates that up to 80% of African SMEs fail within the first five years, despite having the highest entrepreneurship rate in the world. Infrastructure and connectivity, access to business enablement tools, access to finance and digital skills are all potential stumbling blocks for SMEs.

The biggest obstacle most SMEs face is accessing finance and affordable lending. These businesses frequently lack suitable information such as a credit history, financial statements and other prerequisite data points, while the traditional credit-scoring models that many financial institutions use prejudice SMEs. Without access to working capital, SMEs are unable to invest in their business and grow. There is a need to enable tools that SMEs can utilise to collect and manage transactional data that can be used to provide valuable business insights to guide decision-making for the SME, and that can be leveraged to create financial reports.

Digitising SMEs has benefits that support economic growth

Digitisation can help businesses build a financial and transactional history that helps them access loans. This information and well-organised data can enable access and diversification of financing for SMEs in Africa. This financing in turn helps them grow their business, employ more people and contribute to their country’s economy.

Microsoft engages with international organisations such as the IFC, and local financial services institutions, to create innovative financing mechanisms for SMEs on the African continent that enable them to build a credit record and differentiated data sets that tell the story of the business rather than a pure money-in-money-out overview. This allows for a wider range of borrowing opportunities, enabling SMEs to become part of the integrated value chain and participate in the formal economy.

Business tools are an important part of the journey

To successfully complete their digitisation journey, these small and medium businesses also need connectivity and devices that are suitable for business development. Challenges around connectivity and device affordability are certainly not new to Africa. Though the issue of internet access varies considerably depending on the country in question, high cost of data is still a major hurdle for many nations across the continent. Research from the Alliance for Affordable Internet shows that just 14 out of 48 countries in Africa have access to affordable internet, with affordability defined as 1GB of mobile prepaid broadband costing two percent or less of the average monthly income.

Microsoft is working to address Africa’s connectivity issues through the Airband Initiative, which provides investment into infrastructure that drives connectivity. The initiative partners with African startups that are overcoming barriers to affordable internet access in unconnected communities by using TV white space (TVWS) and other innovative last-mile access technologies. Accelerated internet adoption is the precursor to digital enablement. Recently, Microsoft announced that it is expanding the Airband Initiative through new partnerships with local and global providers to bring internet access to 100 million Africans by the end of 2025, and working with partner Viasat, Microsoft is extending satellite connectivity to 5 million Africans.

Another sticking point is access to business hardware. The vast majority of SME owners and entrepreneurs in Africa rely on smartphones to run their businesses. However, being able to access devices such as laptops with preloaded software could help business owners to manage their business processes and reap the rewards of access to best-in-class Software as a Solution (SaaS) products more easily.

As a company, Microsoft has recognised that different SMEs have entirely different solution requirements. Microsoft differentiates itself by working with Independent Software Vendors (ISVs) and startups who build software solutions that can be used with Microsoft technologies. This allows businesses of all sizes to these solutions from the marketplace, with the benefit that when curating a business bundle, an SME can look at their specific needs and match to the software that’s in the Microsoft Marketplace.

The digitisation journey must include skills development

SME owners often have little access to business skills development opportunities. Through platforms such as the Africa Transformation Office’s SME Skilling package, Microsoft Learn, the Cloud Academy and LinkedIn Learning, SME owners can increase their business understanding to help their day-to-day business operations, build their business literacy and develop the technical understanding necessary to support their digitisation journey.

Digitisation can significantly enhance financial inclusion, most particularly for unserved and underserved enterprises such as SMEs. Creating an enabling environment for these important economically active businesses that helps them thrive and participate actively in the continent’s economies is essential for sustainable and inclusive economic growth.

Auto

Chery celebrates automobile excellence, creativity at Lagos roadshow

Published

11 hours ago

April 27, 2024

Trends Admin

Chery celebrates automobile excellence, creativity at Lagos roadshow

Chery Nigeria on Friday held many Lagos fans of elegant new vehicles spellbound during its spectacular roadshow.

The event featured a captivating procession from the Carloha showroom to The Palms in VI passing through scenic routes such as the Third Mainland Bridge, Ikoyi and Victoria Island, ending with a celebration at the iconic shopping mall.

The roadshow not only showcased Chery’s exceptional vehicles but also celebrated the spirit of creativity and community.

The event provided a platform for guests to savour and enjoy the unique display of new work of art and automotive excellence.

The roadshow extravaganza, as the organisers called it, was revealed Chery’s commitment to engaging experiences, showcasing the brand’s latest masterpiece, the Tiggo 8 Pro,Tiggo 4 Pro and Arrizo 5, in an unforgettable way.
The highlight of the event was a unique “Sip and Paint” session led by a notable artist, who skilfully captured the essence of the Tiggo 8 Pro on canvas.

Guests were invited to unleash their creativity as they painted their own interpretations of the iconic Chery logo, adding personal touch.
The climax of the evening came with a breathtaking moment as Eben, renowned for his impressionistic prowess, unveiled his masterpiece – a stunning portrayal of the Chery Tiggo 8 Pro.
The artwork, met with awe and admiration from attendees, encapsulated the essence of Chery’s dedication to innovation, style, and sophistication.
Representative of Chery brand in Nigeria, Carloha, says it will continue to provide automotive solutions to customers with its six-year free service and six-year warranty or 200,000km, whichever comes first.

Meanwhile, Chery has expressed its gratitude to all attendees, partners and supporters who contributed to the success of this extraordinary event.
“As the brand continues its journey of innovation and inspiration, it remains dedicated to delivering exceptional experiences that captivate hearts and minds,” the firm said in a statement on Saturday.

Business

BDCs consider harmonised retail market as naira depreciates further

Published

12 hours ago

April 27, 2024

Trends Admin

BDCs consider harmonised retail market as naira depreciates further

The Association of Bureaux De Change Operators of Nigeria (ABCON) has said it is working on establishing a unified retail end forex market operations to tackle volatility and boost regulatory compliance within the Bureau De Change (BDC) sub-sector.

This is as the value of the naira depreciated further at the parallel market to N1,450 to the dollar.

From N1,420 which it was on Thursday, the value of the naira, which had depreciated to N1309 to the dollar at the Nigeria Autonomous Foreign Exchange market (NAFEM) continued to fall at the parallel market.

ABCON president, Alhaji (Dr.) Aminu Gwadabe, said ABCON is carrying out strategic plans meant to unify operators from different cadres of the market including inauguration of state chapters for markets coordination, integration and administering a united market structure.

According to him, ABCON plans to extend its automation policies and platforms to all BDC operators across Nigeria markets and upgrade its Business Process Platform-(formerly called SAAZ Master). He said the new blueprint for a united retail end forex market structure will ensure the deployment of a centralised, democratised and liberalised online real time trading platform.

BDCs consider harmonised retail market as naira depreciates further

Business

Naira gains marginally at parallel market as FG plans for diaspora fund

Published

19 hours ago

April 27, 2024

Trends Admin

Naira gains marginally at parallel market as FG plans for diaspora fund

Nigerian currency, Naira, appreciated to N1,380 per dollar on the parallel market on Friday, posting a gain of N70 in one single day, compared to Thursday’s close of N1,450/$1.

On the other hand, the the local currency weakened to N1,339.23/$1 on the Nigerian Autonomous Foreign Exchange (NAFEM) window, representing a N29.42 decline, compared to the N1,309.81/$1 it closed at on Wednesday.

However, daily turnover on the NAFEM declined by 2.85 per cent to $309.01 million compared to $318.08 million the previous day.

The highest spot rate stood at N1,410, with the lowest recorded at N1,051.

Meanwhile, as part of efforts to attract and accelerate inflow of foreign currency into the economy, the federal government has unveiled plans to float a $10 billion Nigeria Diaspora Fund.