ICT, a driving force behind SMEs growth

Across Africa, hundreds of rural communities, access village phones which have been established in areas where electricity is unavailable and where the network can only be accessed with a booster antenna, which is a device used to enhance or amplify the signal quality.

Fishermen and traders in remote villages and towns rely on mobile phones to scout for the most profitable destination for their fish and fresh produce.

Agricultural traders and fishermen use mobile phones to reduce the cost of doing business, calling to first establish demand instead of travelling long distances to deliver their catch and fresh produce.

Villagers and small entrepreneurs can also send money to their loved ones or make remote payments through their cell-phones to pay for goods and services.  This allows entrepreneurs to order supplies and pay for goods and services using mobile phones, significantly reducing the risk associated with carrying large sums of cash. 

The Village Phone programme, M-Agriculture, Mobile Money and many other information and communications technologies (ICT) based programmes are just a few examples of how entrepreneurs, particularly small and medium-sized enterprises (SMEs) across the continent, are successfully using mobile technologies to connect with customers and grow their businesses.

For example, MTN Uganda, Grameen Foundation USA and 18 microfinance institutions have helped people in 49 of Uganda’s 56 districts to become Village Phone operators. The more than 2000 operators and phone lines provide affordable telecommunications services to residents in the villages.

In Rwanda, people living in far flung areas that are not connected to the power grid can now benefit from MTN’s Comeka ReadySet, a portable solar energy system the telecomms giant launched recently to improve energy and telecommunications access for all Rwandans.

For our continent, the adoption of ICT is fast changing the face of small and medium-sized enterprises (SMEs) on the continent. Owing to the advent of the Internet and the high rate of mobile connections, Africa’s entrepreneurs are embracing the ICT revolution.

In recent years, there has been an acknowledgement in the SME sector that ICT solutions can lower overheads and improve efficiencies. This has happened because of the growing focus on providing tailor-made solutions for the sector by ICT services providers. ICT companies recognise the crucial role of SMEs as the pillar of most economies, particularly in the emerging markets.

According to Informa Telecoms and Media, the continent had registered a staggering 700 billion mobile connections at the end of December 2012, an annual increase of 15%. With its already high mobile phone penetration figures, this is yet another example of Africa’s overwhelming appetite for mobile connectivity. 

With the emergence of new technologies and a strong drive towards digitisation, the role of ICTs as an essential component of the competitive armoury for SMEs has become even more critical. As with other advancements, the needs of customers often place enormous pressure on business to innovate, as a means not only to stay relevant, but to grow the business and improve customer experience.

To this end, with the shift that’s currently taking place in the ICT sector, driven by a strong desire to provide customers with a better customer experience, there's expectation that technology can do more for SMEs, as a way to stimulate economic growth and propel this important segment of most economies into a digital future.  

This expectation is rooted in the belief that successful SMEs are core to the national agenda of most economies in Africa. SMEs are at the heart of efforts to address key socio-economic challenges such as poverty and unemployment.

In South Africa, as is the case in most African economies, the SME sector is one of the largest employment-generating sectors, particularly among the country’s poor.

In Ethiopia, an estimated 50% of the urban workforce is projected to be engaged in the micro and small-enterprises sector.

In Ghana and South Africa, SMEs have become critical agents in enabling the countries attain their development objectives, notably poverty alleviation and wealth creation. 

Therefore, SMEs are not only a strong engine of economic growth and productivity, but also a means of empowerment and distributing wealth. In many emerging markets, SMEs are seen as the most attractive components of the economy.

But to be successful, SMEs have to do more than just have an online presence. It’s no longer enough to just have a mobile phone, a website or email. These tools have to enable the small businessman to connect with the customer in a savvy and cost effective manner to the business.

While some SME-owners still prefer the traditional methods of doing business such as face-to-face interaction, there is no doubt that ICT solutions are enhancing customer centricity and growth of business.

In Nigeria, for instance, where over 70% of businesses are SMEs, a report by Analysys Mason for GSMA shows that broadband has the potential to help diversify the West African country’s economy through the growth of online services in industries, including retail, financial services, healthcare, education and agriculture. The roll-out of advanced technologies such as LTE (long-term evolution), is expected to increase the broadband penetration in the country. And with that, it is forecast that the country’s online retail industry could grow by 55% a year to reach N44.9 billion in 2015, from N4.5 billion in 2010.

Therefore while the mobile phone may have taken the role of a fixed line and the Smartphone is quickly replacing the computer in many parts of the world, it is the adoption of managed services such as cloud computing which is certain to take the growth and improved efficiency of SMEs to new heights.

A recent innovation, cloud computing is basically pay-as-you-use IT. It is the delivery of hosted applications and services over the Internet. This enables the delivery of communication services, remotely enabling users to access services virtually anywhere, at any time.

A key benefit of cloud computing is that an SME pays only for the tool it needs and the number of people who will be using it, be it a payroll software or email. Cloud computing also eases the administrative burden for companies, where instead of dealing with multiple service providers, they can now deal with one and only pay for a single licence instead of multiple ones.

SMEs have the option to outsource the technology they need, saving them massive costs, whilst providing technological tools and services needed to operate sufficiently and competitively. The result is significantly improved business performance due to lower operating expenses.  Ultimately, this translates to improved customer satisfaction levels.

Already, SMEs in countries such as Cameroon, Cote d’Ivoire, Ghana, Nigeria, Uganda and South Africa are either testing or have deployed cloud services. Until fairly recently, a key barrier to embracing ICTs for many SMEs was the cost of maintaining the infrastructure. This is because technology is constantly advancing, adding further financial strain on users who need to keep abreast of technology changes to remain competitive. Managed services or virtualisation and hosted services, gives businesses better control of their IT spend, while allowing them to enjoy greater IT flexibility. 

Digital mapping is another key trend that SMEs in many developed countries are using to expose their businesses and become more accessible.

According to the European Commission, investing in digital technologies is no longer a choice. “Companies can nowadays only be competitive when they embrace the digital world. Digital entrepreneurs are those entrepreneurs that fully exploit digital products and services, including ‘cloud computing’, to reinvent their business models and sharpen their competitiveness,” the Commission says.

Therefore it is clear that while technology has played a fundamental role in helping businesses operate more efficiently, the best still lies ahead, particularly for SMEs.

Already, according to the 2012 Global Entrepreneurship Monitor report, the world’s entrepreneurs are becoming younger. Almost half of the world's entrepreneurs surveyed for the report were between the ages of 25 and 44.  These are techno-savvy adopters of technology who appreciate the value and contribution of ICT to improve business processes. The survey shows that in all geographic regions surveyed, 25-34 year olds display highest rates of entrepreneurial activity.

In India, for example, the adoption of technology services is driving the rapid growth of many small and medium enterprises due to the role of ICT in driving innovation and breaking down barriers to entry.

ICT service providers play a catalytic role within all sectors of the economy. And for sustainable economic growth to take place, SMEs can no longer afford to ignore the link between innovation and entrepreneurship.

Ultimately, any investment in IT solutions should have the customer in mind. It should also deliver significant return on investment. A good ICT tool is one that saves an enterprise time and costs, and increases productivity.

SMEs should therefore be looking to invest in new technologies and new solutions to continue driving such growth, as it allows Africa to be part of global development and has the potential to fuel e-learning, e-health and e-commerce opportunities.

In the end, it is through such advancements that we’ll secure our socio-economic future and create sustainable small and medium enterprises.

By Farhad Khan, Executive for the Enterprise Business Unit at MTN Group