MSMEs Technology

When we talk about digitalization, most of us think that it is a phenomenon that is 20 to 30 years old. We believe this because the phenomenon started taking noticeable proportions in the dotcom era. However, it is not true. Digitalization has its root in digitization which started with the advent of computers in the 1950s. For digitalization to take place, digitization ( the process of turning physical data into digital data) needs to take place. So, what is digitalization and why is it important for business growth?

Digitalization is the process of integrating digital technologies into processes in order to improve them. In a world where competition is fierce, good customer service is key in order to keep customers satisfied and loyal to your product/services. That is where digitalization plays an important role. When a company digitalizes it:

• Increases its knowledge about its customers’ tastes and expectations thanks to the data gathered on them throughout sales. Therefore, the company can offer services/ products more attuned to consumers tastes and trends consequently increasing sales.

• Improves its service execution thanks to the efficiency and consistency leading to more sales.

• Has a clear understanding of its expenditure and thus, a better management of costs. This has a direct impact on the cash flow.

• Has clear information to better plan and seize market opportunities.

• Prevents revenue leakage

• Etc…

The impact of digitalization on businesses is undeniable! Not embracing it will prevent your business from growing fast.

When it comes to digitalization, Frontier Markets are still decades away from Developed Countries and Emerging Markets level. One can argue that Frontier Markets faces challenges that the previous did not necessarily had to endure such as for lack of infrastructure, lack of funds to build the necessary infrastructure, predatory practices from company providing network services allowing the final consumer to access internet, etc.…

However, of all the reasons given stopping Frontier Markets from digitalizing at a fast speed, there is one that is never mentioned: the lack of willingness. This is not political but rather taking a pure business perspective. Have you ever wondered how many businesses located in areas with the right infrastructure have digitalized? How many still run their operations manually? What is stopping them from doing that? Is it that they don’t trust their data to be handled by strangers? Is it that they are not willing to get out of their comfort zone? Or is it about not finding the right technological partner to help and assist them throughout this journey?

Businesses not embracing digitalization are missing out on some great advantages of digitalizing (See our post ‘Digitalization and Business Growth’). Nevertheless, in Frontier Markets, it is up to the companies that have digitalized and technology companies to lead the way in order to increase the rate of digitalization within companies. Show those that are reluctant to why and how they did it and the fruits they are ripping from it.

In previous posts; Digitalization and Business Growth and Digitalization in Frontier Markets; it was highlighted why digitalisation is necessary although challenging to implement. Taking into consideration these challenges, a review will be carried out on the Africa Continent digitalisation in this series called Africa Digitalisation Landscape. The series will kick-off with the Central Africa region followed by East Africa, then West Africa. North Africa will then take suite and South Africa region will close out this series. The parameters we will be looking at are:

1. Internet Penetration

2. Data affordability

3. Qualified ICT manpower 

4. Equipment affordability

Going through all these parameters will give a clearer picture of each region to allow an objective comparison of regions and suggest from our standpoint what should be done for improvement.

Although information about smartphone affordability could not be found for all countries of the ECCAS region, of the 6 countries where information was gathered, smartphones are still a luxury product in this region. When a smartphone cost represents the same weight in the income as the rent or even more, it means that they are not affordable.

Conclusion

Looking at the Internet Penetration, Data Affordability, Qualified ICT Manpower and Equipment Affordability driving digitalisation it can be noted that they are poor and it explains why digitalisation in ECCAS countries is slow. To increase digitalisation amongst MSMEs in Africa as a whole and in ECCAS in particular, it is not a one sided problem. The Final consumers as well need to embrace it. The more the final consumer gets tuned to it, the more it will push the MSMEs to digitalize as it will increasingly become a standard. Unfortunately as it stands neither equipment or data are affordable for the final consumer  and by extension to the MSMEs that are owned by some of these consumers. The growth forecast can be increased if there is an improvement in the 4 first parameters. Nevertheless it shall be interesting to find out how good or bad is the Digitalisation  Landscape in other regions of Africa.