A new report by the International Financial Corporation (IFC) and World Bank says less than 7% of African microenterprises utilize smartphones and computers for their companies, while 71% see no need for them.
Ghana, Kenya, Mozambique, Nigeria, Senegal, South Africa, and Tanzania were surveyed for the report.
The poll results support digital technology adoption. The survey found that microenterprises using smartphones and computers had 2.8 times more productivity, 6.0 times higher sales, and 1.9 times more employees than non-users.
African workplaces also had a gender imbalance in digital technology use. At small enterprises, men were 3.3 times more likely to use computers and 2.4 times more likely to use the Internet to discover suppliers. Younger workers are 1.6 times more likely than older workers to use smartphones.
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Small and medium-sized enterprises (SMEs) in Africa are increasingly embracing technology, which has altered the way they conduct business. Small companies on the continent have little choice but to adopt digital alternatives as a result of the pandemic and the rise of mobile phones and the internet.
Africa’s 44 million small and medium-sized businesses (SMEs) contribute to the continent’s social and economic development. They employ 80% of the continent’s workforce. Experts advocate using modern technologies to help African firms attain their full potential.
Yet, the majority of African microenterprises are developers.
Read also: Moni, Nigerian fintech, offers business loans to African SMEs
Why don’t African SMEs use technology?
The study revealed that 71% of respondents had “no need” for digital technologies, while 35% claimed they were too expensive. 35% indicated they couldn’t use the technology.
Why don’t African businesses use internet-enabled technology? Lack of high-speed internet, microfinance, infrastructure, and gender inequalities were highlighted in the report. Internet connectivity persists.
Unavailability was reported by 20%. According to the International Telecommunications Union, 40% of Africans have internet connections (ITU). Access may not be the main driver of low utilization rates, according to the IFC-World Bank report.
Mobile and high-speed internet is used by 22% of Sub-Saharan Africans, three times more than microenterprises. It said, “Sub-Saharan Africa’s high-speed internet availability has progressively expanded from 25% in 2010 to 84% by 2021.”
According to the research, internet coverage has increased, but connectivity has not. In 2021, 74% of Africans with high-speed mobile internet remained offline.
According to the GSMA’s “State of Mobile Internet Connectivity 2022” report [pdf], 200 million Nigerians and other Sub-Saharan Africans lack mobile broadband. According to research, Africa needs $100 billion to have reliable internet connectivity by 2030.
African businesses face other tech adoption barriers
The research also noted that only 3% of businesses had received microfinance. Smartphone use was 18% higher among borrowed firms. Based on this research, African SMEs’ greatest financial challenges are accessibility and cost. Affordability is the cost of money for businesses to borrow or invest. SME development has been suggested using blended financing.
Also, there is a problem with infrastructure. The IFC-World Bank report found that 44% of companies and 69% of agribusinesses lacked electricity. According to the African Development Bank, 40% of African countries have electricity, while over 640 million Africans do not.
Making utilities financially viable, integrating national utilities and grids, exposing electrification efforts to private sector investments and innovations, and mobilizing strong political commitment are four ambitious strategies the World Bank recommended to overcome Africa’s energy access crisis.