Managing Partner at Chanzo Capital, Eric Osiakwan has stated for the Africa Continental Free Trade Area (AfCFTA) to succeed, there is a need for member countries to integrate their digital strategies to drive the process.
Eric Osiakwan was speaking on the special edition of the MTN Business Executive Break Series on the theme “Accelerating SME Growth and Development – the role of Digitization”.
He noted digitization is going to be a key driver in the success of AfCFTA and government have a critical role to play in ensure that the digitization works effectively in that direction, by providing the needed infrastructure backed by the policies that encourage digital innovation within the private sector.
According to him, Ghana has taken the lead in providing infrastructure and the policies to drive digitization, pointing to the ghana.gov platform, GHQR and the soon to be introduced e-cedi by the Bank of Ghana.
Speaking from his Kenyan base via Zoom, Eric Osiakwan noted however that it is not enough for one country to take the lead and provide the critical enabling environment while other countries are slacking.
“The only way to make AfCFTA work is for us to have an Africa-wide digital strategy that bring everyone along and that means we need to quickly start integrating the digital strategies for the benefit of the entire continent,” he said.
Touching on the pace at which African countries are adopting blockchain technology, he argued that there is need for African government to show the way on how to quickly integrate some of those modern technologies to drive growth in “our economies”.
According to him, government leading the way via the provision of key infrastructure and enabling policies would drive innovations within the private sector and that would go a long way to create the opportunities that would drive growth, particularly within the small and medium-scale enterprise (SMEs).
According to him, focusing national and global digitization strategies on mainly the SME sector has become critical because SMEs are the bedrock of both local and global economies, and indeed the key focus of AfCFTA.
He explained that SMEs constitute about 90 per cent of companies globally, generating about 50% of global GDP, while in Ghana, based of the NBSSI criteria that SMEs are companies earning between US$200,000 and US$5 million, 85% of businesses in the country are SMEs and they account for about 70% of GDP.
“Clearly, the SME sector is critical to both the Ghanaian and global economies so the discussion about using digitization to drive SMEs’ growth is a very important one,” he said.
Eric Osiakwan observed that amid Covid-19, lots of SMEs have been forced to move away from manual processes into adopting digital tools to drive and enhance their businesses and become better and more profitable.
As a result, he noted that, the Central Bank reported that between last year and now, over US$150 billion digital payments have been processed in the country and that is predominantly mobile money transactions.
This, he said, was way above the US$50 billion payments with cheques processed over the period, adding that “this means digital payments is becoming even more critical to the business sector, which is dominated by SMEs, than cheques and bank payments,” he said.
“The use of mobile money has now taken a center stage in business transaction in the Ghanaian economy, which tells you that more and more people are using electronic payments than cash and cheque payments,” he said.
He noted that there is a clear slowing down in the secular economy compared to the digital economy because of the cost and risk associated with cash movements as compared to the ease of digital payments.
According to him, the trend of growth in the adoption of digital transaction is upwards and that presents opportunities for players in the digital space to create more solutions for that sector, once the policies are enabling enough.
Eric Osiakwan cited the example of a grocery shop that did not accept digital payment just months ago, but is now accepting both mobile money and card payments via the Hubtel platform.
Another panelist, Mariam Kaleem Agyeman-Buahin, Head of Digital Marketing, Letshego Holdings noted that the pandemic has accelerated digital growth and “given us the opportunity to develop more solutions for SMEs to help them better serve their core markets, which is the low to middle income target audiences.”
She noted that lots of SMEs in Ghana today stop at social media and think they have gone digital but digitization go beyond social media into using specific digital tools to manage every aspect of the business to ensure growth.
According to her, most digital tools are expensive but SMEs can strategize and prioritize with the usage of initial free trials and by the time they have to start paying for the tool, they would have a clear direction on what the benefits are.
“For instance you need to strategize on whether to prioritize customer experience, customer education, digital marketing, electronic know your customer, financial management or human resource during the trial stage during the trial stage so you will be clear on what is critical for your company before you start paying,” she said.
Mariam Agyeman-Buahin said it is also important to seek professional assistance for an effective digital strategy, but what is critical is for the strategy not to be left with just one department, as some often do, but rather run across the entire organization so the benefits would be far reaching.