Tech business opportunities in Africa

Posted on May 25, 2017 12:00 am

Africa is a very fertile ground for small businesses and when it comes to technology based business, the confidence is growing, especially among small businesses. Most businesses doing well with the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better to trim costs, reach customers and suppliers, innovate and get more control.According to data your blogger has obtained, small and medium enterprises in Africa, specifically those with less than 100 employees employ two-thirds of private sector workers and contribute more than half of Africa’s private sector GDP. If advanced online technology becomes the norm among them, the productivity gains will spread through the whole economy. Thats why Internet is likely to benefit Africa in the long run than any other continent. From my experience, I can confidently say there are several opportunities including but not limited to social platforms, mobile based systems, data analytics, and the cloud infrastructure.In my view, the online toolset is far broader than just having a website customers can find through a search engine. African companies need to explore and exploit four online toolsets to stay relevant and thats why the aforementioned opportunities are significantly important.Though the fact remains that there are challenges to starting a business in African countries, most of these challenges are usually overcome by small businesses. So if you are looking to start a tech business in Africa, those are business opportunities you can explore. A small business owner can run their firm from a mobile device. Sadly, data shows only 5% of African SMEs with an internet connection have developed mobile-optimised websites. Good news is that customers, suppliers and employees are talking online in Africa. Most of them expect companies to be part of that trend. African SMEs with internet connection according to the data say they use social networking for marketing purposes.On the other side of data analytics, tools for capturing and exploiting data are much easier to use than in the past. With them in place, business owners learn about their firm’s performance and their environment which customer segments are buying and which channels they buy through.In South Africa, Nigeria and Kenya, cloud business is taking shape and customers can now access essentially any IT service, on demand, over a network. Applications like web search, file management and emails can all be managed over the web. Cloud services offers more than these basics and makes enterprise IT capabilities available to small firms.

Overall, SMEs in Africa are far from universally adopting new online tools. About three quarters of Africa SMEs have low or very low digital engagement, that is, at most only have a website and do some social media according to the data I’ve. Opportunities do vary by sector with SMEs in business services, retail and hospitality being strong adopters, while farmers and builders use online tools less.The biggest constraints are awareness and skills. About 76% of Africa SMEs say they they do not have the skills to make the most of online services.Some firms are also concerned about data security, privacy, and being locked in to an online provider. Me thinks that such concerns will be allayed as firms become better informed. If African countries want to see their economies grow, reduce unemployment among the youths, governments and industry should help smaller firms to achieve more productivity from online tools. For example, government can promote broader productivity growth and innovation and support the adoption of online tools indirectly. The likes of East Africa Community and COMESA free trade pacts among others can increase domestic productivity through competitive pressure and broader market access. Also, foreign direct investment and skilled migration can also make local firms and workers more productive. In countries like Kenya, South Africa and Mauritius, online is now the default way for interacting with government. Government portals are driving adoption more broadly. In Mauritius, government as a user of cloud services has demonstrated their value. Also the government there has been supporting the development of trust in online services.In other countries, the government should get policy settings right for cost-effective broadband networks. Such things as reliable, high bandwidth, networks and international capacity need to be improved. In addition to that, awareness and skills are important, but African countries should largely let the private sector lead in helping SMEs improve skills and digital literacy. In South Africa, online service providers educate SMEs as they develop their markets and thats why the country boasts of the highest adoption in Africa.As African companies becomes more efficient, the shareholders of those companies will benefit most. When many African companies become more efficient, customers benefit, because companies compete on quality.No doubt the information technology revolution in Africa is underway and it is time for any small and medium enterprises to get on board. Your blogger is already in the bandwagon and welcomes you anytime.

Contador Harrison