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It’s Getting Easier for SMEs to do Business in Africa and Technology is Playing Key Role
By SoromfeUzomah, Head of Strategic Partnerships at Microsoft 4Afrika
The 2020 World Bank Doing Business report was recently released, and showsthe overall business climate in sub-Saharan Africa issteadily improving. Looking at the ease of starting and maintaining a business, the region as a whole improved one percentage point over the last year, with a few standout countries. Mauritius and Rwanda rankamong the top 20 countries globally, while Nigeria and Togo are among the top global improvers.
In the last year, countries across the region implemented73 reforms, removing certain red tapes and obstacles for SMEs. While this is positive development, sub-Saharan Africa is still classified as a weak-performing region overall, with an average ease of doing business score of 51.8 – below the global average of 63.0.
Small businesses continue to battle with challenges includingunreliable electricity, property registration, tax payment and debt management.But one trend is clear: As levels ofinternet access, technology adoption and digital innovation improve, so domany of these challenges.
The enabling power of technology
The use of online systems for tax filing, for instance, improved the ease of doing business scores in Côte d’Ivoire, Kenya, Mauritius and Togo. Nigeria also introduced the e-payment of trade fees, reducing the time to import and export, and an online platform for registering businesses, strengthening itsranking. Globally, markets that scored the highest in the report all have widespread use of electronic platforms.
Digital platforms are able to more quickly process and streamline administrative tasks, giving SMEs back precious time and money to focus on doing, and growing, business.Removing the burden of paperwork and long queues also has an incredible motivating factor. When the Kenya Copyright Boardworked with Microsoft to develop an online, automated platform to help SMEs register intellectual property (IP), registrations increased by 100 percent. Additionally, one study found that the knock-on effect of increased IP registration is economies that are 26 percent more competitive and twice as likely to produce and export complex, knowledge-intensive products.
SMEs are eager to adopt these digital services to improve their productivity. In South Africa, The State of Small Business report found that78 percent of small businesses surveyedchoose accounting software to manage their financial records.
Foundations of access needed
But,the same report found that more than half of SMEs list internet access as their principal obstacle to adopting technology. The accessibility and success of these digital platforms depends on reliable access to electricity and the internet. In terms of connectivity, many African countries are still below the 20 percent critical mass necessary to achieve improved efficiencies and information flows for economic growth and innovation.
To tackle this, more investments into reliable infrastructure are needed. However, while infrastructure develops,innovation can help to bridge the gap. In Nigeria, ICE Commercial Power has introduced an off-grid, solar-powered solution to connect 10,000 SMEs to electricity. The solar grids are linked to a Microsoft cloud-computing platform, which enables remote maintenance of the equipment (reducing any downtime) and lets SMEs manage and pay for their electricity use as they go. Similarly, in Kenya, Mawingu Networks has introduced Wi-Fi hotspots run on solar-powered base stations, connecting some 600 SMEs in Nanyuki to high-speed, low-cost internet.
An ecosystem for growth and development
While governments can play a leading role in building supportive business climates for SMEs, the responsibility doesn’tsit solely with them. Public and private sector organisations can collaborate on building an enabling ecosystem, where private-sector innovation and services are backed by public-sector policy to accelerate growth.
Recently, the United Kingdom took regulatory action by forming the Banking Competition Remedies Ltd, which administers funding directly to financial institutions that address SME needs. While this action was specific to the banking industry, it’s a great example of public-private collaboration to learn from.Africa’s market for digital solutions targeting SMEs is vibrant. In East Africa, Africa 118 provides directory and marketing services to SMEs, whilePopote Payments supports budgeting, expenditure tracking and accounting. In West Africa,SpacePointe helps SMEs build affordable online marketplaces and ecommerce strategies. Finally,FirstBank, Vodacom (and soon to be Jumia)haveall partnered with Microsoft to offer a discounted package of technology and educational resources to their SME customers.
While the private-sector has historically taken the lead investing in these kinds of solutions, the United Kingdom example demonstrates ways the public sector can get involved, encouraging innovation that benefits small business growth.
The shared benefits of supporting small businesses are numerous. Governments benefit from boosted economies and job creation. Private-sector businesses attract a large and lucrative consumer base. And SMEs are able to access the resources they need to succeed. Key to this collaboration will be involving SMEs very much in the innovation and policy-making process – ensuring their needs are meaningfully heard, and met.
Commercial banks in Nigeria closed 2.021 million bank accounts in the first quarter of 2024, Q1’24, to clean their books of questionable accounts and comply with regulatory orders on the linkage of bank accounts to the National Identity Number (NIN).
This is contained in a report by the Nigerian Interbank Settlement System (NIBSS), which also indicated that the number of inactive bank accounts grew month-on-month, MoM, by four million or 2.0 per cent to 19.7 million in March 2024 from 19.3 million in the previous month, February.
A bank account is classified inactive when it records zero transactions including deposits, withdrawals, transfers or point-of-sale transactions for six months.
However, details of the “Industry Bank Account Database”, a monthly data reported by banks, and compiled by the Nigerian Interbank Settlement System, NIBSS, also indicated that the number of active bank accounts grew by 6.62 million or 3.0 per cent to 219.64 million from 213.02 million in February.
Recall that in December 2023, the CBN issued a directive to all commercial banks in the country to restrict tier-1 accounts without proper Biometric Verification Number (BVN), and National Identity Number, NIN, that are not linked by Thursday, March 1st, 2024.
According to NIBSS data on BVN enrollment count, 61.6 million Nigerians have BVN as of April 2024.
Credit: Vanguard
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Dubai-Based Citizenship Firm Imperial Citizenship Expands to Lagos, Targets Africa’s Growing Wealth
Imperial Citizenship, a Dubai-based firm specialising in Citizenship and Residency by Investment (CRBI) solutions, has set its sights on Africa’s burgeoning wealth with the launch of a new office in Lagos, Nigeria.
This strategic move positions Imperial Citizenship to capitalise on the continent’s growing population of high net worth individuals (HNWIs) seeking international investment and mobility options.
Imperial Citizenship boasts a proven track record of success, having secured over 2,000 approvals for clients seeking alternative citizenship and residency pathways. Their partnerships with over 15 governments worldwide provide a diverse portfolio of investment opportunities that adhere to strict international regulations.
With its Lagos launch, Imperial Citizenship begins its foray into Africa. The continent boasts a burgeoning HNWI population, according to PwC, presenting a lucrative market for investment firms like Imperial Citizenship.
According to the World Bank, African economies are projected to grow by 3.4 % in 2024 as the African Development Bank Africa has reported that Africa will account for eleven of the world’s 20 fastest-growing economies in 2024. Highlighting the market’s potential, Mr. Zaid Al Hindi, Founder and CEO of Imperial Citizenship, says, “our expansion into Lagos allows us to directly cater to this affluent segment, offering them strategic solutions for global asset diversification, optimised investment opportunities, and enhanced global mobility.”
“At Imperial Citizenship, we do not operate through intermediaries, as we differentiate ourselves through direct government partnerships. This ensures transparency, legality, and efficiency throughout the application process, providing peace of mind for investment-minded clients” Zaid stated during the launch event in Lagos.
Speaking on the company’s approach to CRBI, Zaid mentioned, “At Imperial Citizenship, we prioritise a client-centric approach. We go beyond simply offering programs; we provide dedicated advisors who understand the unique needs and aspirations of each client. This personalised service ensures clients receive tailored investment options that align with their financial goals and risk tolerance”.
The launch of the Lagos office underscores Imperial Citizenship’s commitment to global expansion. With physical offices in Dubai and now Nigeria as well as operational representatives in Mexico, Algeria, and Turkey, Imperial Citizenship demonstrates its ability to cater to a geographically diverse clientele.
Looking ahead, Zaid highlighted that Imperial Citizenship plans to broaden its service offerings and expand its reach into new markets. By strategically targeting Africa’s rising wealth, Imperial Citizenship is well-positioned to solidify its role as a leading player in the CRBI industry, offering investors a gateway to global opportunities.
In a recent gathering, organized by 234Finance, key stakeholders and HNIs came together to discuss the theme “Fueling Progress in the South East.”
The conversation highlighted the rich heritage, entrepreneurial spirit, opportunities for growth and the potential of the South East to be economic powerhouse.
During the discussion, the Managing Partner of 234Finance, Ezinne Nwazulu unveiled plans for an upcoming event of significant impact: the 4-week intensive SME Bootcamp and Mentor Matchup Challenge South East edition designed to empower SMEs. The program aims to empower SMEs with the knowledge, tools, and capital for rapid expansion and global competitiveness.
This initiative is building on the success of previous Mentor Matchup Challenge events, which equipped SMEs with actionable strategies and one-on-one mentorship, resulting in winners of the pitching competition securing grant funding to scale their businesses by 4x-10x.
The SME Bootcamp will feature an array of activities, including physical and virtual training sessions, onsite industrial training, and a pitching competition.
Ezinne Nwazulu emphasized the rigorous selection process, where the top 100 applicants meeting the criteria will undergo intensive training at two training centres in Abia and Anambra. From there, the most promising 15 participants will have the opportunity to pitch their business for grant funding.
Dr Chima Anyaso, Chairman of Caades Group, expressed his commitment to the region’s development and encouraged entrepreneurs with innovative crafts to seize this opportunity.
Criteria for selection are uncompromising, emphasizing technical expertise in core sectors; Agribusiness, Manufacturing, Supply Chain & Logistics, Fashion & Textile, and Retail, with a particular focus on businesses operating within the South-East region for at least three years and significant growth potential of 4x-10x.
The Bootcamp is set to commence from May 14 to June 14 2024 with Southeast-based entrepreneurs encouraged to visit the 234finance bootcamp to apply.
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