After facing unprecedented changes in the wake of the COVID-19 pandemic, Small and Medium Enterprise (SME) confidence in Sub-Saharan Africa is on the rise, according to the latest research by Mastercard.
The inaugural Middle East and Africa (MEA) SME Confidence Index found 74 percent of SMEs in Sub-Saharan Africa are optimistic about the next 12 months. In fact, 68 percent of SMEs in Sub-Saharan Africa are projecting revenues that will either grow or hold steady. Almost half at 48 percent are projecting an increase.
Upskilling, training, development support and access to credit for future growth
As many regional economies gradually enter the normalization and growth phase, and social restrictions continue to ease, small and medium sized businesses in Sub-Saharan Africa have identified upskilling staff for the future (73%), access to training and development support (69%), and easier access to credit (69%), as the top three drivers for growth.
Among all regions surveyed, Sub-Saharan Africa also saw the highest potential in being able to do business internationally (62%). This highlights the opportunities for small businesses that arise from internal transformation and global connections, as well as industry regulations and trends.
For instance, in Kenya, the Index found that 61 percent of SMEs in Kenya are seeing positive signs of recovery.
The report says that in the country, small and medium sized businesses have identified easier access to funding (73%), acceptance of digital payments, better data and insights, and digitizing business operations (72%) as the top three drivers for growth.
“This highlights opportunities that arise from internal transformation as well as industry regulations and trends,” the report says.
Mastercard says it is working closely with government, financial organizations and the wider business community to create opportunities for SMEs across the region.
Already, the organization has pledged $250 million and committed to connect 50 million micro, small and medium size businesses globally to the digital economy by 2025 using its technology, network, expertise and resources in support of the company’s goal of building a more sustainable and inclusive digital economy.
As part of these efforts, Mastercard is focused on connecting 25 million women entrepreneurs. For many small businesses, reducing their dependence on cash through digital payments acceptance has played a major factor in being able to get paid and maintain cashflow.
“Across the region, small businesses and micro merchants have embraced quick, safe and secure digital payments technology during an extraordinarily challenging time. Over a year later, it is encouraging to see that the optimism which is both needed and necessary to tackle the next phase, is alive and well for nearly three in four small businesses in the region. Results from the SME Confidence Index indicate a positive trajectory for the region’s economic recovery, and as a technology enabler of choice, Mastercard will continue to work closely with our partners to ensure that our ecosystem responds to mitigate the concerns that remain,” said Raghav Prasad, Division President, Sub-Saharan Africa, Mastercard.
The challenge to maintain and grow business a key concern, whilst public and private partnerships seen as engine for growth
When asked about the main thing that keeps them up at night, 56% of SMEs in Sub-Saharan Africa mentioned the challenge to maintain and grow their business was their top issue.
Looking at concerns over the next 12 months, over half (57%) identified the rising cost of doing business, while 49% cited access to capital. Private sector partnerships (59%) and government-led initiatives (51%) were identified as having the biggest potential to positively impact SMEs and the wider Sub-Saharan Africa market.
As consumer trends evolve in a post-pandemic world, businesses must adapt and prepare for the future.
Mastercard’s Economic Outlook 2021 estimated that 20-30% of the COVID-19 related surge in e-commerce would be a permanent trend in share of overall retail spending globally.
Furthermore, reflective of the region, recent studies from Mastercard showed that 68% of Ivorian consumers are shopping more online than they did since the start of the pandemic and 99% of Kenyan shoppers would consider making a purchase with an emerging payment technology over the next year.
The survey was administered through telephone and/or face-to-face interviews on 1,533 SME decision-makers in 7 countries in 3 regions. According to Mastercard, the survey included about 300 respondents per country in Kenya, Nigeria, Ivory Coast and South Africa.