- Due to their small footprint, traders are located closer to consumers, along transport hubs and routes, or within local communities.
- Proximity also extends to knowing and stocking customer’s preferred brands and products and offering credit to loyal customers.
- United Nations Economic Commission for Africa indicates that small and local retail transactions account for 70 percent of total transactions in Kenya alone.
Across East Africa, it is not uncommon to see dukas and kiosks around every other street corner offering some of life’s daily essentials such as sugar, soap, tissue paper as well as bread and milk.
While they may not seem like much, East Africa’s dukas and kiosks are the backbone of the economy, providing jobs and basic essentials to millions of people.
According to EuroMonitor International, these spaces for trading can range from as little as 1sqm up to 30sqm. Due to their small footprint, traders are located closer to consumers, along transport hubs and routes, or within local communities.
Proximity also extends to knowing and stocking customer’s preferred brands and products and offering credit to the loyal customers.
Although it is difficult to quantify the exact impact these small shops have on the economy due to scarcity of data, a recent paper by the United Nations Economic Commission for Africa indicates that small and local retail transactions account for 70 percent of total transactions in Kenya alone.
It is therefore undeniable that these cornerstones of neighborhoods form an integral part of a country’s socio economic system.
Digitization can lift EA’s dukas and kiosks
Smollan, representing some of the world’s most loved FMCG and commerce brands, indicates that millions of small, independent shops in East Africa will need to look at diversifying, digitizing, and even partnering for growth in response to a challenging and rapidly evolving landscape.
That said, these businesses face numerous challenges despite being relied on by the vast majority of the population.
Some of these include limited access to financial tools; the lack of ability to manage stock and inventory; adoption of technology; vulnerability to economic shock; competition from larger players, and as East Africa evolves, the unbundling of regulatory barriers.
This means that disjointed structures can make it difficult for them to effectively run and scale their businesses despite being the dominant players in the market.
Potential for growth
Executive, SEA Region, Smollan Tanzania Warren Brett Cluster noted that empowering small-scale retailers through digital and financial inclusion is definitely the way forward as greater innovation and investment becomes the catalyst for change.
“In Kenya we’ve done this successfully with Unilever and Mastercard under the ‘Jaza Duka Program’ equipping small retailers to be able to accept electronic payments and access financial services. So too in Tanzania we are looking at how we can create a tech solution to support secondary sales from the distribution footprint. It’s all about putting the power in the hands of the ‘duka’ owner in this case and supporting consumer needs through consistent availability,” he said.
Additionally, for small-scale retailers to get much needed support, East African nations need to formulate solutions that make business easier and more efficient for them, by addressing the need for inventory management, logistics, mobility, and access to credit among others.
Game changers in the EA market
One such firm working towards scaling up dukas and kiosks in the region is Wasoko. Currently operating in Kenya, Tanzania, Uganda, Rwanda, Ivory Coast and Senegal, the Kenyan start-up supports and enables informal and small-scale retailers to conveniently stock their shops, eliminating the hassle of dealing with different suppliers and distributors.
The firm also offers customized lines of credit to provide retailers with working capital and data-based insights for further analysis.
The East African Business Council (EABC) and the International Trade Centre (ITC) also recently launched an online platform designed to boost the competitive edge of the region’s small businesses.
The platform provides small businesses with an avenue to support their recovery, build resilience and drive growth through digital technology.
Likewise in the banking and financial services sector, Hilbret Bank launched a digital payments platform that allows Ethiopian small businesses and retailers to accept international card payments for online purchases.
“The opportunities are there – through collaborative networks, government support programs and the growing demand for locally made products. It’s a matter of closing off the ecosystem to make it easier for retail to be serviced by brand owners, and the technology to enable their businesses,” said Brett.
