MSME growth through collaboration

According to the African Development Bank, the informal sector accounts for 55% of GDP and 80% of the labour force in Sub-Saharan Africa. While there is no definitive figure to describe the size of the Micro Small and Medium Enterprises (MSME) market in Africa it is safe to conclude that this sector represents quite a sizable and growing portion of the African economies as such represents a significant potential for economic growth and job creation if this sector is stimulated.

Despite over 1.3 trillion dollars invested in charity over the last 40 years in Africa we have yet to see any significant effects on the ground. This is because handouts while answering an immediate need in the short and medium term create an adverse effect of dependence on those that are assisted. In our view, the best way to improve livelihood is to help people to produce for themselves through economic empowerment. Herein lies the solution, it is to provide businesses in the informal and MSME sectors with technology solutions that would help to scale their organisations and grow revenues.

I once heard a story about the invention of the gun, when the English invented this device though the metal framing and bullet were their ideas the essential ingredient “gunpowder” wasn’t, they simply discovered it in the Middle East which in turn was imported from China. This single innovation marked the beginning of the British Empire starting with the defeat of the Africans. Fast forward to today and equally the lessons in digital transformation have all been learnt and Africa could skip the trial and error segment and innovate to solve their unique problems. The idea is simple, use the lessons learnt in digital transformation to help MSMEs in Africa to scale, and become digital natives and lean organisations from their inception. In other words, creating a breed of digital entrepreneurs that helps small businesses with limited finances to scale at less cost and grow revenues.

Lets look at the digital transformation journey of mature economies in the West over the last thirty years. They went from paper-based manual processes to Microsoft Word, Excel, and Access. Then came the advent of software, companies had to adapt their processes to the software and not the other way around. Then the era of reporting was born as organisations begin to realise the power of data and visualisations, Microsoft Excel, for the most part, was the tool of choice. As companies grew they purchased different brands of software which led to siloed systems and duplication of data and tasks. In the quest for productivity gains, companies started expensive data integration projects like data lakes and data warehousing initiatives, these projects cost millions and had a very high failure rate. Soon the advent of ERP software began, which helped to solve some of the common business pain points like siloed systems, duplicate data, process overlap, inefficient/ insufficient reporting, and manual processes. Then came platforms like the leading-edge Microsoft Dynamics 365 where organisations can build and customise CRM and ERP solutions on one platform allowing strong interoperability, data security, scalability, seamless reporting and and more.

Our solution would focus on three areas of innovation for MSMEs and companies in the informal sector these areas include an ERP platform for small businesses that would leverage the lessons learnt in mature markets and create a digital organisation from their inception and partnering initiatives with banks, insurance companies, governments, NGOs and others to provide services like small business courses, bank accounts, loan facilities, affordable insurance products and other needed services. The benefits of such a program are threefold for MSMEs, governments and partners. The key benefits are increased revenues and business growth, moving MSMEs from the informal to the formal economy, access to formal banking services, increased revenues from taxation, improved economic indicators and reduction in poverty, reduced criminality linked to money laundering, terrorism and drug trafficking and reduce dependency on foreign aid and social programs.

This is yet another way that Africa could solve its unique problems using Western-inspired solutions that are adapted to the continent. We are looking for strategic partners for introductions, related sector minds, advice and insights and funding to help us to deliver this very scalable solution across the continent, if you are interested please contact at [email protected].