Tuesday, January 19, 2021

Digital economy: why Africa should make it easier for MSMEs to overcome development

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By Juliet Umeh

GRAMlobal pandemic, Covid-19 has undoubtedly had a negative impact on the world economy and Africa is not exempt.

Studies and economics experts have predicted that Africa needs digital infrastructure for its micro, small and medium-sized enterprises, MSMEs, to take a leap in development, create jobs and accelerate the economic recovery after Covid-19.

Making this claim recently, Jumia Nigeria President and Jumia Group Head of Institutional Affairs Juliet Anammah said that Africa needs millions of jobs that provide meaningful work and provide people with a path out of poverty.

He noted that in March 2019, a study published by the Boston Consulting Group projects that digital markets operating in Africa like Jumia may create an additional three million jobs by 2025.

According to Anammah, by 2050, two out of five children will be born in Africa and the average age will be 19, while 77% of the population will be under 35 years old.

She said: “According to the Brookings Institution, 70 percent live below the global poverty line. Africa is also experiencing rapid urbanization with rural dwellers moving to a few megacities and putting enormous pressure on the physical, political, economic and social infrastructure of these cities.

“Due to the impact of Covid-19, GDP is expected to contract to -2.5 percent in 2020 from 3.4 percent in 2019, the first recession in 25 years.

“The jobs in Africa today come from MSMEs. Of the 418 million people employed on the continent, 83% are employed by MIPYMES.

“Africa has between 85 and 95 million MSMEs and of them 96 percent are micro-enterprises and half of them are engaged in commerce. 87% of African MSMEs are located in 10 African countries, including Nigeria, with 77% of total African GDP.

Digital infrastructure

Anammah, however, noted that the average Internet penetration in Africa is 39.5 percent; 525 million people have access to the Internet.

She said: In six African countries such as Kenya, Libya, Seychelles, Morocco, Mauritius and Tunisia, mobile internet penetration is above 65 percent. Eighty percent of Africans have mobile subscriptions.

“Smartphone adoption is 40 percent and is projected to be 67 percent by 2025. This digital infrastructure is an asset that Africa can leverage to jump-start development, create jobs, and accelerate economic recovery after Covid-19.

How facilitating the entry of MSMEs into the digital economy will boost economic growth

Anammah reiterated that facilitating the transition of MSMEs from the offline economy to the digital economy will boost economic growth and employment in Africa.

He stated: “Given the impact of the pandemic, the World Bank projects an increase in the number of people who will fall into extreme poverty in 2020.

World Bank Group President David Malpass said: “To reverse this serious setback in development progress and poverty reduction, countries will need to prepare for a different economy after COVID, allowing capital, labor , skills and innovation move into new businesses and sectors.

“For Africa, the digital economy is a critical new business sector to focus on in the future.

For this to be successful, Africa also needs the supportive environment for the digital economy to thrive, and these include the right policy framework and narrative.

According to Anammah, the policy framework has to do with the use of fiscal measures to incentivize African trade and MSMEs trading, in particular to move from an informal economy largely offline / cash to formal digital platforms. and traceable.

In the correct narrative, he said that African media must support the digital economy and the businesses operating in that space to see successful results and achieve the necessary development. This can come in the right narratives that will encourage investment in the sector.

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