Digitalising SMEs
Availability of web-building facilities across the world means that micro, small and medium enterprises (MSMEs) can now have internet access and digital platform at a low cost.
Today, we will continue the analysis of a research report done by The Economist entitled ‘Ensuring a more productive Nigeria: Powering SMEs’. The essence of these analyses is to expose local MSMEs to changing trends across the world and bring to the notice of Nigerian authorities factors inhibiting the growth of this segment.
Nigeria has over 83 million internet users, with active telephone lines have hitting 145.4 million by June, 2015. The country’s teledensity currently stands at 103.9 per cent, according to data by the Nigerian Communications Commission (NCC). Internet penetration is also estimated at 50-60 percent as ICT grows at an annual rate of 35 percent. These make information dissemination and access as well as transactions easy for business owners.
The Economist says that digital platforms including Facebook, Twitter and WhatsApp have provided opportunities for smaller businesses to advertise to, and interact with, their customers for free, moving away from the traditional and more expensive mediums.
Start-Up Digest gathered that technology has also brought in online retail trading, with Konga and Jumia taking a large share. Several new small players including supermart.ng, addiba.com, webmall.ng, buyam.com.ng, and drinks.ng rode on the success of these two giants, to Euromonitor International.
Euromonitor says internet retailing maintains a particularly attractive unique selling point in Nigeria as the growing urban population is more internet conscious and more likely to prefer internet retailing to store-based retailing due to the severe traffic congestion in Nigeria’s major cities, which makes home delivery a very attractive option.
Similarly, The report by the Economist quotes Paul Jackson, South Africa managing director of pan- African advertising agency, Grey Group, saying: “The phenomenon of mobile is just explosive.
It is giving access to the markets and bringing various consumers a world of information. It is the obvious medium to leapfrog to.”
It further says that while mobile operators are offering a range of value-added services in entertainment and social media platforms such as Facebook and WhatsApp, there is an opportunity for investors to leverage m‑payment technology and shopping apps for SMEs to increase purchasing power for physical and virtual goods via mobile.
The Economist adds that mobile ubiquity has been a game-changer for SMEs as mobile phones allow users to overcome some of the country’s infrastructure gaps by making it easier to transfer money, pay bills, check and calculate prices, and communicate with colleagues from any location.
It says beyond mobile technology, internet penetration is the second substantial potential contributor to SME productivity.
But the report reckons that the first problem to overcome is the concern about online fraud and insufficient Internet security.
Another challenge, according to the report, is the high cost of broadband, which is critical for the data and memory-intensive operations that firms depend on. The next challenge is the rural-urban divide as infrastructure relevant for ICT remains weaker in remote areas.
The report suggests lowering the costs and streamlining the process for right-of-way permits for broadband providers.
“SMEs importing ICT equipment solely to build their capacity and capability (ie, not for onward sale) should be exempt from import tax,” it further suggests, adding that the government needs to fast-track the release of spectrum for mobile and fixed broadband operators.
It admonishes that the cost of spectrum also needs to be reduced if broadband is to be expanded nationwide.
ODINAKA ANUDU