There are approximately 44 million small to medium enterprises (SMEs) in Africa, employing around 80% of the workforce on the continent and contributing 60% of the GDP in emerging economies. Yet, during times of crisis, these businesses are often the least resilient due to limited cash reserves, smaller client bases, and less capacity to manage commercial pressures. Technology can be a lifeline for African SMEs, providing opportunities to enhance efficiencies and productivity, access finance and markets and remain relevant in a fast-paced global digital era.
Since SMEs already provide the largest proportion of jobs on the continent, digitalising their businesses will unlock the necessary growth of individual economies within Africa. In doing so, Africa’s competitive, digital standing will be strengthened, alleviating unemployment and poverty. Supporting SMEs on their digital transformation journey should therefore be a priority.
Barriers to technology adoption
Even though about 70% of SMEs in Africa have intensified their use of digital technologies in recent years, the continent has many unique challenges that hinder this adoption. In an Africa.connected report on SMEs in Africa, released jointly by Vodacom, Vodafone and Safaricom last year, research indicates that high start-up costs for integrating technology is a critical barrier. Whether purchasing hardware, subscribing to software solutions, or hiring skilled IT professionals, the costs can quickly escalate beyond the reach of most small businesses. Unlike larger corporations, SMEs typically operate on tight budgets with little room for discretionary spending on tech upgrades.
Furthermore, many tech solutions available today are designed for businesses in more developed markets and come with price tags that are often unaffordable for African SMEs. This mismatch between product offerings and local market realities further alienates these enterprises from integrating technology into their operations. This underscores the need for tech solutions that cater specifically to the needs and budgets of African SMEs.
Reliable internet connectivity, electricity, and secure digital platforms are essential for SMEs to operate in the digital space. Yet, many parts of Africa still grapple with infrastructural deficits, especially in rural areas where many SMEs are based. Without reliable internet access, for instance, cloud-based platforms and other digital services remain inaccessible, making it difficult for SMEs to adopt technology.
Enabling SMEs to transform digitally
SMEs often struggle to access financing due to their size, lack of collateral, or limited credit histories. Fintech solutions that offer alternative lending models, can help bridge this gap. For example, findings from the Africa.connected research show that an estimated 12.3 million individual users in Ghana, Kenya, Tanzania, and Mozambique were able to access credit through the mobile money service, M-PESA.
Developing products tailored to the tech needs of SMEs and providing affordable financing options that enable these enterprises to invest in technology is essential. Vodacom Business is proud to be a digital partner to SMEs, who turn to us to help them find innovative possibilities to boost their businesses through technology. Our understanding, experience and expertise can position SMEs for success.
Tech companies can also play a role in capacity-building initiatives that equip SMEs with the skills and knowledge needed to adopt and maximise the use of technology. Programmes that offer digital skills training, mentorship, and business incubation can help SMEs not only adopt tech but also use it effectively to grow and compete in the marketplace. Online portals, such as V-Hub can help SMEs feel less intimidated by digital solutions by providing them with targeted education, such as guides, videos, and webinars to enable SMEs to use their limited IT resources effectively and gain a competitive advantage on their road to becoming digitally transformed.
Public-private partnerships in infrastructure development will also ensure that SMEs can access the digital tools necessary for their success. Expanding broadband internet, providing a back-up power supply, and creating a secure digital ecosystem will help bridge the digital divide and enable more SMEs to participate in the digital economy.
The future of Africa’s SMEs lies in their ability to harness the power of technology. However, for this to happen, an enabling environment is essential. With the right support, these enterprises can contribute even more significantly to Africa’s economic growth, job creation, and overall development.
- Sannesh Beharie, Managing Executive for SME & Mobile Products at Vodacom Business
