SMEs role critical in fighting economic inequality

Tuesday, October 20th, 2020 00:00 |

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Soromfe Uzomah 

One great challenge of the 21st Century is the need to reduce poverty levels and economic inequality globally.

Economic growth is the most powerful tool for reducing poverty and improving quality of life in developing countries. 

The latest World Bank’s Poverty and Inequality Report finds that, “More equal countries tend to have healthier people, be more economically efficient, and have greater social stability than highly unequal countries.

Countries that invest smartly in reducing inequality today are likely to see more sustained economic growth than those that don’t invest.

Less inequality can benefit vast majority of world’s population.”

However, emerging markets are often defined by marked levels of economic inequality.

And while governments have a responsibility to close the income gap, Small and Medium Enterprises (SMEs) can have a profound impact in ensuring economic growth.  

SMEs represent about 90 per cent of businesses and more than 50 per cent of employment worldwide.

Formal SMEs contribute up to 40 per cent of national income in emerging economies, and these numbers rise significantly if we include informal ones.

It’s estimated 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments.

In emerging markets, most formal jobs are generated by SMEs, which create seven out of 10 jobs. 

Despite their significance, many SMEs struggle with same challenges – lack of access to affordable finance, trade and investment barriers, and lack of access to global markets.

Poor physical and ICT infrastructure often prevent them from operating efficiently or accessing international markets at competitively. 

Digitisation has potential to offer SMEs new opportunities to participate in global economy, but many are lagging in digital transformation and access to the internet remains unattainable for many in the region.

We’ve found that investing in strategic partnerships can provide much-needed assistance for SME’s.

In Nigeria, for instance, Microsoft has partnered with First Bank of Nigeria, Vodacom Business Nigeria and MTN Nigeria, to provide their SME customers with access to technology, skills development resources, business networks and an educational platform.

The bank is building the capacity of local SMEs and accelerating their digital transformation by providing them exclusive and tailored non-financial solutions, giving them access to technology at discounted rates and in local currency, while providing access to business networks and education. 

In Kenya, Microsoft has partnered with Jumia to host an official store page on its online mall.

This provides SMEs with opportunity to buy and use genuine Microsoft products and solutions with payments in local currency, helping to solve payment-currency challenges – and the intention is to grow this into other markets.

Innovative partnerships like these can really have a direct impact on SMEs and the challenges they face. 

Digital skills are essential for any organisation to grow, and we want to encourage technology adoption and skills development in every organisation.

The Biz4Afrika Online platform, for example, is helping SMEs access technology, information, skills and markets.

It’s helped bring 1.7 million SMEs online, and more than 500,000 SMEs in Africa are consuming cloud services today.

Public-private partnerships play an important role. In Morocco, the partnership with Algo Consulting has developed Wraqi, an online administration solution to improve citizen-government relations.

It allows users to create an account with a signature repository, which government entities can use to identify, authenticate and authorise citizens remotely using electronic signatures and multi-factor authentication, likely to accelerate and facilitate, access to services. 

If we are genuine in our desire to see economies of Africa grow and strengthen, then we must work with intent to help SMEs overcome challenges they face.

In doing so, levels of inequality and income disparity can be reduced. — The writer is head, Strategic Partnerships at Microsoft 4Afrika

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