Entrepreneurship is a key component of economic growth in many countries. In addition to fostering innovation, research, and industrial development, entrepreneurship also expands and enhances already-existing businesses.
Fostering entrepreneurial ecosystems helps support economic growth by encouraging entrepreneurial activities and processes that ultimately support the growth of small businesses.
Small and medium-sized businesses (SMEs) make up a large portion of African enterprises and form the basis of almost all national economies because of their importance in generating new jobs and offering specialised services.
Data from PwC records that SMEs in Nigeria contribute 48 percent of the national gross domestic product, 96 percent of businesses, and 84 percent of employment.
However, the World Bank’s economic projection for growth in Africa is expected to stall in 2022, dropping from four percent to 3.6 percent. Thus, to maintain growth and sustainability in a market that is experiencing varying economic and political challenges, SMEs must be innovative. In other words, innovation is essential to SMEs’ long-term viability and internationalization.
E-commerce has grown significantly over the past few years; it has helped small businesses in Africa to expand. According to Statista, the revenue generated in 2020 by online shopping in Africa was estimated to be around USD 27.8 billion, which is an increase of over USD 6 billion since 2019.
The report also indicates that the e-commerce revenue in Africa will keep increasing between 2021 and 2025 and the e-commerce sector in Africa might reach a value of over USD 46.1 billion. One reason for this growth may be attributed to the high levels of mobile phone use; this level of mobile penetration has in turn promoted the entrance of electronic payments, mobile banking and mobile money accounts. Africa is said to have the highest proportion of individuals with a mobile money account.
Small businesses are starting to leverage the power of technology and the internet to access new customer bases and reach new markets. Sub-Saharan Africa for example has some of the most promising and largest markets that provide the biggest opportunities for small businesses and e-commerce: Nigeria, Ghana, Kenya, Uganda, Tanzania, and Ethiopia.
This is because African consumers simply want the same things as their international counterparts – convenience, great service, easy payment processes, and quality products at reasonable prices. Although there are still a lot of misgivings and uncertainty about the trustworthiness of the quality of goods, payment systems (interoperability), and transaction security, this has not impeded the adoption rate of e-commerce. Another reason for this growth may be attributed to the steady innovation in solving some of the challenges facing small businesses in Africa in the area of payments.
Choosing the right and appropriate payment gateway for businesses is crucial and one of the solutions to most of the challenges highlighted above. This is because merchants have to ensure that it works in their preferred markets, and meets the latest encryption standard that protects both the merchant and the customer. Introducing a seamless e-payment solution will improve the customer experience in many ways: faster checkout, payment security, and convenience.
With Unlimint, which offers multiple payment methods accessible across the globe, businesses can successfully enter new markets by making it easier for their customers to transact in many different ways. By leveraging Unlimint’s payments platform, businesses can access tools and services that provide greater flexibility and efficiency.
It is crucial that small business owners collaborate with fintech innovators and offer their businesses a chance at increased exposure and expansion. E-commerce is a paradigm shift that is fundamentally transforming traditional business methods in Africa and is proving to be a useful tool for the digital future of the African economy.