FinTech

Leveraging Technology For The Growth Of SMEs In Africa

SMEs Africa

As we progress into the knowledge economy in the 21st century, technology is playing an increasingly dominant role in human activity. Access to the internet via personal computers and mobile phones has increased capacity to find solutions to problems.

In Nigeria, internet access is expanding rapidly. According to Statista, a global statistics organization, approximately 76.2 million now have access to the internet in Nigeria, as at 2017; about 50 percent increase from 2013.

This internet boom has led to an explosion of enterprise across the country. Today, young people are increasingly engaged in enterprise as a means of survival and also to pursue their dreams under a harsh economy. In light of this, many young people have stopped looking for jobs and have launched their own businesses, leading to an SME boom.

The Small and Medium Scale Enterprises (SMEs) are businesses with turnover of less than N100 million per annum and/ or less than 300 employees, according to the CBN. To survive and succeed in the Nigerian environment, SMEs need to take advantage of the leverage provided by financial technology.

Studies by the International Finance Corporation (IFC) show that approximately 96 per cent of Nigerian businesses are SMEs and they represent about 90 per cent of the manufacturing/ industrial sector in terms of number of enterprises. Small and Medium-scale businesses, together with Micro-Enterprises are called MSMEs and they form the bedrock of enterprise and employment in Nigeria.

YOU CAN ALSO READ: National MfB Will not Displace Other MfB – Emefiele

A statement by the Ministry of Trade and Investment says Nigeria’s over 37.07 million MSMEs, account for more than 84 per cent jobs in the country. MSMEs also account for about 48.5 per cent of the gross domestic product, GDP, as well as about 7.27 per cent of goods and services exported out of the country.

MSMEs have significant untapped growth potential and strong export and employment potentials. However, they are hampered by huge gaps in infrastructure, poor financial support and credit environment, and high levels of unskilled workforce.

These are problems that Financial technology has come to solve. According to a technology expert and CEO of SystemSpecs; John Obaro, technology can provide an alternative to the infrastructural deficit in Nigeria, simplifying processes for entrepreneurs.

The growth of the SME sector has been impeded for long because of the difficulties in accessing information, infrastructure, and affordable credit. Nigerian entrepreneurs are solving this problem by leveraging on technology. One of the technology firms rolling out SME-specific products is SystemSpecs.

Last year, SystemSpecs rolled out Remita SME, a version of its flagship software that is powering the Federal Government’s Treasury Single Account (TSA), dedicated to SMEs. Remita SME attempts to bridge that infrastructure gap for Small and Medium Scale Enterprises seeking rapid growth. Users of the Remita platform enjoy certain growth-advancement benefits.

These include the ability to collect payment from anywhere at any time, electronic record of transactions for proper accountability which aids in getting loans from financial institutions, and payroll functions. Another problem for SMEs is the difficulty in managing their human resources. Some SMEs are growing fast but are unable to install corporate management systems that will ensure proper monitoring and efficiency. One of the indigenous firms solving this problem for SMEs in Nigeria is Probitybooks, a young firm which announced in 2017 that it had created an all-in-one accounting solution designed to manage bookkeeping, invoicing and inventory for business owners that cannot afford hiring full-time accountants or as a complement to the roles of accountants and bookkeepers.

Another young firm, Primepayroll, created a Payroll automation solution for SMEs. SystemSpecs has also produced an SME-specific payroll software called Remita Payroll, which automates Human Resources processes for medium-scaled organizations.

Other Nigerian tech firms enabling SMEs include Paylater, which provides direct access to soft loans, and Tranter IT that provides IT support for SMEs. According to Mayowa, a businessman who makes high-quality leather shoes and ships to clients across the world, one of his greatest needs is to get a nice and simple way to receive money online from his clients. With the explosion of FinTech in Nigeria, entrepreneurs like Mayowa will be able to connect with products like Remita SME, register and start receiving payment from their customers.

The emergence of Remita SME, PrimePayroll and other SME-specific solutions indicate the adaptability of technology. For several years, technology was the monopoly of large enterprises who could afford it. Now, these indigenous companies have taken financial inclusion to another level with their innovations.