A COMPREHENSIVE study conducted by GSMA Mobile for Development (M4D) and the UK Department of Business and Trade reveals the predominant presence of micro-enterprises among African businesses, highlighting the significance of micro, small, and medium enterprises (MSMEs) in Africa’s economic landscape.
The research, encompassing over 44 million formal MSMEs in Africa as of 2018, predominantly consisting of micro and small businesses, underscores their pivotal role, accounting for 80 percent of jobs in the region. Notably, MSMEs generate 70 percent of GDP in Ghana, showcasing their substantial contribution to the economy. The study recognises the escalating influence of online platforms in fostering the growth of this sector.
Examining more than 1,500 MSMEs across Egypt, Ethiopia, Kenya, Ghana, Nigeria, and South Africa, the research highlights the role of online channels in breaking barriers for small businesses, aiding expansion with minimal costs, and integrating informal enterprises into the broader economy.
Amid the Covid-19 pandemic, which disproportionately impacted women-owned businesses, the study observed a surge in online shopping across Nigeria, Kenya, and Ghana, demonstrating increased adoption of e-commerce in these markets.
Despite global trends favouring e-commerce, the study notes African MSMEs have been relatively slow in embracing this digital shift compared to other regions, citing various challenges. Limited internet connectivity, handset affordability, unreliable electricity, and an underdeveloped digital payment infrastructure contribute to the reluctance of business owners to pivot to online marketplaces.
While e-commerce investments surged in Africa in 2022, with 330 online retailing companies securing funding, the continent only received one percent of total global venture capital funding in this sector. The study underscores the need for improved trust in online transactions, addressing regulatory gaps, and enhancing digital literacy among entrepreneurs.
To bridge the gap, the study recommends updating policies, bolstering cybersecurity, data privacy, and copyright laws. It emphasises the necessity for public-private collaboration to invest in training programs and initiatives aimed at enhancing digital enterprise skills and improving access to affordable handsets and data plans.
