Digital transformation is no longer a luxury for African businesses; it is a necessity.
This was the emphasis of the Africa Tech Alliance Forum (AfriTECH 4.0), held recently in Lagos, where industry experts, policymakers, and SMEs discussed innovative strategies for leveraging technology to leapfrog into the digital future.
Themed “Leapfrogging Digital Transformation for Future of Africa’s Economy,” AfriTECH 4.0 accentuated the indispensable role of SMEs, which form the backbone of Africa’s economy.
According to the International Finance Corporation (IFC), SMEs contribute approximately 90% of businesses and 50% of employment across the continent.
Yet, many face challenges in accessing the tools and opportunities necessary for growth.
The lessons from AfriTECH 4.0 provide a guide for SMEs to build resilience and promote innovation while staying competitive globally.
Financial Inclusion: Empowering SMEs Through Technology
Mr. Biram Fall, regional general manager, QNET sub-Saharan Africa, highlighted the massive possibility of financial inclusion in Africa, noting that “with over 350 million unbanked adults, there is a significant potential for financial inclusion and digital solutions for Africa.”
He stressed the transformative power of fintech in providing essential financial tools like savings accounts, credit, and insurance, all of which are important for SMEs seeking economic independence.
The demand for financial inclusion aligns with projections of a $75 billion e-commerce market in Africa by 2025, driven by internet access and smartphone adoption. However, Fall cautioned against infrastructural and cultural obstacles: “Limited banking infrastructure and high cash dependency hinder digital engagement.”
SMEs can benefit by embracing mobile wallet solutions, which simplify transactions and boost consumer trust, thereby opening access to a wider e-commerce market.
With over 60% of Africans under 25, young entrepreneurs are leading digital growth by building scalable tech solutions, as emphasized by Jude Ozinegbe, founder/convener at Cyberchain.
Similarly, women-focused programmes and local initiatives supporting female entrepreneurs ensure inclusivity. In empowering these demographics, SMEs can benefit from diverse perspectives and creative solutions, boosting innovation and long-term growth.
These will go beyond bridging gender gaps to also stimulating a culture of innovation that strengthens local economies.
Blockchain and AI: Redefining SME Operations
In his keynote, Kashifu Inuwa Abdullahi, director-general of the National Information Technology Development Agency (NITDA), emphasized the disruptive capability of blockchain and artificial intelligence (AI).
He stated, “Blockchain and artificial intelligence are powerful technologies that offer Africa unprecedented opportunities. By strategically integrating these technologies, we can propel Africa forward as a dynamic leader in the global digital economy.”
For SMEs, blockchain presents avenues to secure transactions, ensure transparency, and reduce operational inefficiencies.
Abdullahi projected that blockchain could contribute $300 billion to Africa’s GDP by 2025, especially through financial inclusion and governance applications.
Meanwhile, AI-powered tools offer SMEs the ability to optimize resources, automate operations, and drive productivity, particularly in sectors like agriculture, healthcare, and education.
Challenges SMEs Face in Adopting Emerging Technologies
While the prospects of digital transformation are evident, SMEs often encounter limitations:
- Digital Literacy: Many SME owners lack the skills needed to effectively use advanced technologies.
- Cost of Technology: Financial restrictions limit access to tools like AI and blockchain.
- Resistance to Change: Traditional businesses often hesitate to digitise operations.
- Infrastructure Gaps: Limited connectivity in rural areas affects adoption rates.
Addressing these issues requires collaboration between governments, the private sector, and educational institutions. Through training, subsidies, and partnerships, these challenges can be mitigated to enable SMEs to unlock their potential.
Cybersecurity: Safeguarding the Digital Future of SMEs
Dr. Obadare Peter Adewale, chief visionary officer of Digital Encode Limited, addressed the increasing risks accompanying digital transformation.
He noted, “The rapid pace of technological advancements has introduced new cybersecurity threats and challenges.” For SMEs, which often operate with limited resources, powerful cybersecurity frameworks are essential to protect against cyberattacks and fraud.
Obadare highlighted that “Healthcare, financial services, and cloud providers remain prime targets, with attacks on critical infrastructure and IoT expected to intensify.”
The takeaway for SMEs? Adopting a security-first culture, supported by partnerships between governments and private sectors, is essential to ensuring resilience in a digitally interconnected economy.
Useful Tips for SMEs
SMEs looking to make maximum use of technology can follow these steps:
- Start Small: Begin with low-cost digital tools like WhatsApp Business or mobile payment systems.
- Leverage Training Opportunities: Join government or private sector training programmes focused on digital literacy and entrepreneurship.
- Collaborate with Fintechs: Partner with startups that can provide tailored solutions for SME needs.
- Explore Funding Options: Tap into grants and microfinance opportunities aimed at promoting tech adoption.
Digital Payments: A Game-Changer for SMEs
Mrs Ebehijie Momoh, CEO of AfriGoPay Financial Services Limited, stressed the growing importance of digital payments in facilitating financial inclusion.
She noted that “Nigeria’s digital payments landscape is experiencing rapid expansion, with 2023 alone seeing an estimated $730 billion in transactions.”
For SMEs, innovations like the AfriGo card, which processes transactions in local currency, reduce reliance on foreign exchange and enable faster capital turnover.
Momoh underlined the need for accessibility, affordability, and product diversity in digital payment solutions. She added that “fintech companies are critical in ensuring affordable and accessible services, supported by regulations and a robust digital infrastructure to enable responsible and sustainable financial growth.”
SMEs that leverage these tools can simplify operations, reduce costs, and expand their market reach.
Policy and Accountability: Bridging the Gap for SMEs
Muhammed Rudman, CEO of the Internet Exchange Point of Nigeria (IXPN), critiqued the contrast between policies and their execution. He stated, “We have excellent policies, but when it comes to implementing those policies, we are really, really lagging behind.”
Policy implementation is necessary for SMEs to access the infrastructure and services needed for digital transformation. Rudman called for tougher penalties for non-performance to ensure government accountability, a measure that could directly benefit SME growth.
Collaboration: The Key to Digital Transformation
A recurring theme at AfriTECH 4.0 was the importance of partnerships. From QNET’s financial literacy programmes that promote entrepreneurship to NITDA’s focus on digital literacy, collaboration between governments, private sectors, and SMEs was deemed essential.
“True progress requires collaboration,” stated Mr. Biram Fall, emphasizing the role of cross-sector partnerships in building a digital economy that is inclusive and resilient.
The insights from AfriTECH 4.0 reiterates that SMEs are at the heart of Africa’s digital transformation and financial inclusion, leveraging emerging technologies like blockchain and AI, adopting strong cybersecurity measures, and utilizing innovative digital payment systems, will help SMEs drive economic growth and resilience.
However, the journey requires accountability, supportive policies, and strategic collaborations to reach Africa’s goal of a competitive digital economy.
“Africa’s potential in the digital age is boundless… We are not just spectators in the digital revolution; we are pioneers. Let us seize this moment to place Africa at the forefront of global innovation.” – Kashifu Abdullahi.
