{"id":245371,"date":"2023-04-03T20:13:09","date_gmt":"2023-04-03T20:13:09","guid":{"rendered":"https:\/\/jobtechalliance.com\/?p=245371"},"modified":"2024-03-18T06:25:09","modified_gmt":"2024-03-18T06:25:09","slug":"the-digitalization-of-the-the-african-microenterprise","status":"publish","type":"post","link":"https:\/\/stage.jobtechalliance.com\/index.php\/2023\/04\/03\/the-digitalization-of-the-the-african-microenterprise\/","title":{"rendered":"The digitalization of the the African microenterprise\u00a0"},"content":{"rendered":"\n

By Josh War<\/p>\n\n\n\n

The digitization of small business in Africa is a trend that has been rapidly growing in recent years. A study by Mastercard and the International Finance Corporation found that 93% of small businesses<\/a> in Sub-Saharan Africa have digitized at least one aspect of their business operations. With the rise of technology, many small businesses are turning to digital tools and platforms to streamline their operations and reach a wider customer base.<\/p>\n\n\n\n

Small business in Africa is big business – Africa has produced over 44 million SMEs<\/a>, and in markets like Nigeria and Kenya, informal retail accounts for over two-thirds <\/a>of the total retail market.<\/p>\n\n\n\n

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Source: DFS Lab<\/a><\/figcaption><\/figure>\n\n\n\n

There are three big advantages of digitalization for small businesses in Africa: <\/p>\n\n\n\n

(1) Increased efficiency and reduced costs. By automating routine tasks, such as scheduling appointments, sending invoices, and processing payments, small businesses can save time and reduce the risk of human error. This leaves more time for business owners and employees to focus on delivering high-quality services to customers. Digital platforms can also increase access to supply chain, reducing costs and building efficiencies.<\/p>\n\n\n\n

(2) Improved sales. Social media and purpose-built digital platforms enable businesses to reach a wider pool of customers, outside of their immediate geographies, sometimes outside of their entire countries. This can also enable small businesses to reach higher paying customers.<\/p>\n\n\n\n

(3) Access to finance. Through digitizing sales, records, and\/or supply chain, traditionally informal microenterprises without \u2018historically viable\u2019 data points for credit scoring are now able to gain access to a range of financial services, from inventory financing to growth loans.<\/p>\n\n\n\n

Every mom and pop shop in Africa is being digitalized\u00a0<\/h2>\n\n\n\n

Today digitalization in mom and pop shops in Africa is being driven by a number of factors, including changing consumer behavior, the increasing availability of affordable digital technologies, the rise of e-commerce platforms and ofcourse venture capital pumping into the sector. Sayo Folawiyo termed this as the \u201cretail SME rush\u201d<\/a>, which gave rise to the likes of Twiga, Wasoko, Trade Depot, MarketForce, and Sabi.<\/p>\n\n\n\n

Briter Intelligence reports that over $490m was raised by 28 B2B commerce startups <\/a>between 2009 and 2022, with over 90% coming between 2021 & 2022 alone. Wasoko raised $125m in 2022, Alerzo raised $10.5m in 2021, Sabi raised $20m in 2022, Marketforce360 raised $40 Million in 2022. These platforms help small retail businesses to connect with customers and manage their operations offering business management, supply chain, financing and customer management solutions. As one 2021 Techcrunch article called out<\/a>, \u201cThe process of digitizing the operations of mom and pop stores in Nigeria is serious business right now. In fact, it might be the second-best thing after fintech at the moment.\u201d\u00a0<\/p>\n\n\n\n

While the FMCG retail space is becoming thoroughly digitized, what is happening in other small business sectors?<\/p>\n\n\n\n

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Source: Mercy Corps<\/figcaption><\/figure>\n\n\n\n

Wait!! We are digitizing every other microenterprise?<\/h2>\n\n\n\n

In our earlier article What do jobtech platforms do if there are no jobs?<\/em><\/a>, we forecast the rise in \u2018vertically integrated platforms\u2019 in Africa – platforms which provide a full suite of the infrastructure and tools for entrepreneurs to earn a livelihood. In this way they function almost as an \u2018e-commerce engine\u2019 specific to a sector. While the first generation of jobtech in Africa was built as gigmatching platforms – centrally aggregating and productizing services and matching the providers to buyers – a second wave of platforms is providing the infrastructure (business management tools, supply chain, market access) for service providers to succeed on their own. Sayo Folawiyo described this shift<\/a> with South African home services marketplace, Kandua, as a shift from gigmatching to building \u2018HustleOs\u2019 for the service provider.<\/p>\n\n\n\n

While there’s still a lot to learn within this space we have already seen a number of platforms emerging as such \u2018vertically integrated platforms\u2019 within the verticals below:<\/p>\n\n\n\n