The world is presently facing disruptions on an unprecedented scale. Another global recession is unfolding amid much uncertainty: currencies have crashed, whole nations have gone bankrupt, energy and food prices are skyrocketing, the crypto bust is worsening an already high trust deficit on the African continent, and supply chains are only just recovering from the worst impacts of the Covid-19 pandemic.
Vulnerable groups are worse off…
Even then, the continuing implications of these developments does not affect us all equally. Already marginalised groups: women, the less digitally literate and poorer communities and the small businesses for and by those communities, have been disproportionately impacted by the pandemic. These groups have seen economic outcomes worsen, health-, education- and for MSMEs in particular, market-access restricted.
… but their reach is staggering
And yet, hard evidence tells us that this group has the potential to determine the wealth of nations, even in the global north. OECD evidence from 2017 suggests that MSMEs contributed to 53 percent of employment in the UK. Closer to home, in Kenya, that figure jumps to 80 percent. The UN sees MSMEs as a priority area for SDGs, because the empowerment of this group has wide reaching implications for the most marginalised: job creation for MSMEs directly benefits the vulnerable — particularly women, improving their incomes and economic outcomes, with a ripple effect on education, savings and greater resilience over time.
Lessons from Covid-19
If Covid-19 has taught us anything, it is that the global economy is more connected than ever, and we cannot afford to remain unprepared for inevitable shocks that will come. Businesses worldwide, but especially in Africa, have had to contend with major disruptions to supply, heightened business costs from raw materials and imports, to capital erosion and higher energy costs. These have been particularly heightened in the global south, where sporadic electricity access, relatively higher levels of digital illiteracy and insecurity have threatened the survival of smaller businesses.
No business, whatever its size, can survive without consumers of its goods and services. Small businesses in particular, are bearing the brunt of a reduction in local demand for their product, owing to the depleted fortunes of their target communities. And so, for these small and micro businesses whose market-access has been disproportionately impacted by the pandemic and ongoing global recession, the danger is clear and present.
Why indeed, should we support MSMEs to digitise?
MSMEs constitute over 90 percent of businesses in Nigeria and 95 percent of businesses in Africa, according to the AfDB. And according to UNCTAD, they are the primary drivers of innovation. We cannot speak about empowering underserved communities without strengthening their very pillars. From market folk in Tejuoso, to traders in Masai market, there is a need for solutions that allow Africans to take greater ownership of their economic outcomes.
AfDB research found that MSMEs found online business profitable because it helped them gain more stable profits or enter higher-value markets. Anecdotal evidence from a small family-run business confirmed that the business’ online presence protected it from the detrimental impact the pandemic had on many SMEs. The core finding here must therefore be that digitisation is critical for improving business performance, and especially crucial for securing business continuity.
Evidence presented by Augusta Free Press suggested that the e-commerce industry would generate $3.74 trillion in sales this year. Imagine the scale of opportunity, if small businesses were fully represented in the e-commerce economy? In 2021, global retail e-commerce sales were valued at around $4.9 trillion representing a 70 percent spike in just four years. The size of that untapped market tells us that there is a commercial and moral imperative to focus our efforts on this overlooked group.
Read also: Experts urge MSMEs to tap financing opportunity in equipment leasing
Whose job is it to do what?
Underserved communities are often supported by small businesses that are transitory in nature, but this does not have to mean that earnings and profits should be similarly unstable. At QShop, we understand that the future is mobile. Mobile devices are facilitating credit access, remittances, savings and e-commerce. So, not only do we offer SMEs the ability to get online in just a single click, our mobile-first approach allows these groups to understand and manage their sales wherever and whenever.
Inevitably, there is also a role for public actors to play. Smaller businesses tend to have limited interaction with the government. Yet, the fact of limited capital and resources means that accessible and functional utilities are especially critical if small and micro businesses are to thrive. These are the information networks, roads, water and energy, to name a few.
And so there can be no meaningful growth or sustainable future for small businesses and the networks of employees and vulnerable communities that rely on them, without structured and consistent government action to address the existing utility gaps.
In Nigeria in particular, where efforts have been made to scale access to resources for typically overlooked groups, we must ensure that the end user remains top of mind. It is futile to provide millions of dollars in potential funding for MSMEs whose immediate needs are N100,000. Expanding the reach and awareness of existing microloan programmes is important, but so also is ensuring that those resources are channelled into helping them build resilience and familiarity with the digital tools to compete in this new digital economy.
Unlocking the power of small: the promise of MSMEs
The Economic Commission of Africa revealed that e-commerce revenues for goods are still only at 14 percent because only around half of businesses have internet access. Contrast this with the very real fact that MSMEs are pivotal for driving or stagnating economic growth; there is a moral imperative for concerted stakeholder action to support MSMEs’ resilience building. QShop’s guiding promise is to provide a community to support the growth of small and medium businesses. By offering MSMEs the ability to get online in just a single click, we are doing our part to ensure there is a profitable future for small and micro enterprises on this continent.
Alebiosu is a Lagos-based entrepreneur
