Technology and entrepreneurship present new independent employment paradigm
By Simone Cooper
SMEs are Africa’s employment lifeline, providing an opportunity for the continent to positively leverage its demographic dividend for growth and sustainable prosperity.
The African Development Bank reports that while 10 to 12 million youth enter Africa’s workforce each year, only three million formal jobs are created annually. In short, the majority of young people entering the job market each year in South Africa and across Africa are unlikely to find formal employment amongst the continents existing businesses and corporates.
While the corporate embrace of technology is also likely to slow the pace at which formal businesses add jobs, on the other side of the digital disruption coin, technology is also opening up vast new opportunities for self-employment.
In short, “the convergence of technology and entrepreneurship presents young Africans a new opportunity for self-employment on a scale not seen before,” says Simone Cooper, Head of Business Clients at Standard Bank South Africa.
As a bank committed to driving Africa’s growth, this was the rationale behind the development of Standard Bank’s Enterprise Banking offering, designed to assist entrepreneurs to start, manage and grow their businesses through:
• Enterprise Direct, providing clients virtual access to a team of bankers and specialists able to guide and support small businesses through start-up, growth, development and expansion
• BizConnect, a dedicated business hub providing businesses access to free information resources, tools, templates, coaching and development programmes
• Point of sale devices, enabling small retailers to accept card payments
• A R5-a-month MyMoBiz transactional account, helping small businesses track and manage their business finances and transactions affordably
• A mobile banking app and internet banking service enabling 24/7 digital banking
• A range of online business lending facilities
• Instant Money, helping small businesses store cash safely at no cost while enabling wallet to wallet payments and cash deposits and withdrawals through access points, including major retailers
• SimplyBlu, an eCommerce solution in partnership with MasterCard allowing businesses to showcase their products and services online while providing a customisable e-commerce website able to perform online payments. SimplyBlu also offers a stand-alone and easy-to-use payment gateway function for existing websites
• Value-added services on devices also create additional revenue streams for retailers through selling airtime and lotto tickets
• Innovative, secure, and competitively priced cash collection and other cash services for small businesses operating on the ground in the real economy
• Trade Club and Trade Suite together provide an end-to-end trading, import/export, financing, shipping, customs and foreign exchange facility.
These abilities also contribute towards social development. The average SME employs five people. In South Africa, it is estimated that each employed person feeds or supports eight people. These numbers illustrate the disproportionally large positive impact that self-employment or the establishment of SMEs can have on the communities that they serve and the broader economies in which they operate.
“SMEs are deeply embedded in their communities and are particularly effective at solving for the social and other challenges endemic to economically marginalised communities,” says Cooper. Add in Africa’s higher percentage of woman-headed households, and “the potential for entrepreneurship to solve for the continent’s equally large gender-inequity challenges increase exponentially,” she adds.
“In short, increasing the number of Africans, and especially African women who employ themselves independently will not only have a positive impact on growth, but will also help address many of the social development issues that challenge investment – and the effectiveness of investment – in Africa,” explains Cooper.
On gender parity in enterprise development, Standard Bank has learned that all businesses need support accessing markets, finance and skills. “Where women entrepreneurs differ from their male counterparts, however, is in not having the abundance of networks, guidance and mentors that men can generally access,” says Cooper.
To help address this challenge, initiatives like Standard Bank’s Top Woman Virtual Conference, Basali women business development programme, the Sebenza Mbokodo, Mme re ka thusa and Femtrepreneur initiatives, as well as partnerships with the likes of the International Women’s Forum of South Africa, all also provide business networks for women.
Looking ahead, the challenge – and huge opportunity – for Standard Bank is to scale its abilities to partner SMEs for growth.
“We know that we can support and grow entrepreneurs. And we know how to network woman-owned businesses to access success,” says Cooper.
Key to taking these abilities to scale is technology.
“Technology is the game-changer providing SMEs an ability to punch above their weight and compete effectively with the big guys,” observes Cooper.
Today, for example, SMEs can leverage new communications platforms – like Zoom, Teams and Slack – to quickly develop the hybrid, disintermediated workspaces and cultures more suited to contemporary service and growth models. SMEs also have an advantage over established corporates in developing and leveraging simple and authentic user generated content to position themselves effectively – and competitively – in the emerging post-Covid marketplace.
Furthermore, the current Web-3 environment is seeing previously dominant large platform businesses increasingly challenged by decentralised, agile, smaller and independent technology businesses. This presents an opportunity for smaller businesses to decentralise what has, for a decade, been a very centralised technology space.
To capitalise on the opportunities presented by technology, it is essential that Standard Bank assists SMEs to embed the ability to tilt within their DNAs. While commitment to a concept is important, agility – the ability to let go and do something else – is also a critical cultural attribute for SMEs in the new economy.
“For smaller businesses to pivot to new opportunities, they need to leverage technology to unlock, especially, the diverse relationships that exist across value chains,” explains Cooper.
SMEs also enjoy a distinct advantage in being uniquely well-placed to de-formalise the current corporate business model. And getting this right is not expensive. In fact, with Tik Tok and other easily accessible digital platforms it is much easier for SMEs to develop the human-centric product and service culture increasingly required in the new economy.
While the SME sector is undoubtably where innovation and fresh thinking develops, it is also where risk resides. “This presents Standard Bank an exciting opportunity to fund the growth and expansion of Africa’s SME sector,” observes Cooper. SMEs, for example, often require advice and practical business support as much as, or even more, than money. Understanding the value chains and broader ecosystems in which SMEs operate – especially where banks are already actively funding other players in the value chain – provides the insight to understand and assess an SME’s potential and then lend with confidence.
An ecosystem view also broadens the assessment lens, allowing the consideration of alternate criteria in addition to cash or physical collateral in the construction of informed funding solutions.
While having an intimate understanding of SME clients and their abilities is key, “being present in multiple value chains across the full business ecosystem in most of our African markets also provides us an advantage in identifying opportunity – and linking our SME partners to this opportunity,” reports Cooper. By adopting an ecosystem view – as opposed to a collateral-debt view – Standard Bank is often able to look beyond money, recognising that businesses and their owners also needed guides, templates and mentorship to grow.
Leveraging technology to unlock the partnership potential of SME value chains in tandem with the bank’s broader ecosystem presents SMEs a real opportunity to level the playing field in the new economy.
“Technology also provides Standard Bank the runway to take its tried and tested abilities to partner with SMEs to scale across Africa, achieving measurable GDP growth across the continent through SME activation,” says Cooper.