Small Business Economy in Africa
by Vennisa Owusu-Barfi
Source: afrikanheroes.com
With about eighty percent of Africans currently engaged in the small business economy, small businesses form the backbone of the African economy. 1 As an important driver of economic growth across the continent, providing support to these enterprises is of critical importance to the development of African economies.
With the rapid digitization of the global economy, individual business owners in Africa are struggling to catch up. With less than half of the continent’s population directly connected to the internet and 24 percent of businesses online, 2 more financial investment needs to be made in developing the technological infrastructure to support these businesses. Alaba International Market, for example, is a billion dollar tech enterprise in Nigeria dealing in electronic devices but relies on a brick-and-mortar approach for its distribution. 2 With large businesses like this with massive revenue and capital failing to integrate fully into the digital economy, smaller businesses have a much lower chance of success.
Source: chopdawg.com
However, the growing initiative and entrepreneurial spirit of young Africans is a clear sign of the changing direction and evolution of African economies away from the public sector. Africa is on its way to become a tech superpower if more investment is made in the form of financial and human resource training to equip the youth in growing new businesses and solutions to the continent’s problems. According to some global estimates, a minimum of $90 billion dollars by 2030 when combined with a friendly business environment by African governments is sufficient to transform and utilize this potential across the continent. 3
Source: regtechafrica.com
Most tech startups in the United States during the dot com boom of the late 90s and early 2000s heavily depended on the startup network and community in Silicon Valley, California.4 Thus, a supportive network and environment needs to be fostered to help grow the small business economy and mentor the growing number of entrepreneurs across the continent.
Sources:
“Supporting Small and Medium Enterprises in Sub-Saharan Africa through Blended Finance.” Supporting Small and Medium Enterprises in Sub-Saharan Africa through Blended Finance | Center for Strategic and International Studies, 29 June 2022, https://www.csis.org/analysis/supporting-small-and-medium-enterprises-sub-saharan-africa-through-blended-finance
“Digitizing Africa's Small and Midsize Businesses.” Harvard Business Review, 20 Aug. 2021, https://hbr.org/2021/08/digitizing-africas-small-and-midsize-businesses
Blaise Bayuo Roxanne Bamford Belinda Baah Judith Mwaya Chizi Gakuo , et al. “Supercharging Africa's Startups: The Continent's Path to Tech Excellence.” Institute for Global Change, https://institute.global/policy/supercharging-africas-startups-continents-path-tech-excellence
“Silicon Valley: Building on a Culture of Looking Forward.” CHM, https://computerhistory.org/stories/silicon-valley/