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Digital Economy: Why Africa must facilitate MSMEs to leapfrog devt – Expert

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Global pandemic, Covid-19, no doubt, has negatively impacted the world economy and Africa is not exempted.

Studies and economy experts have predicted that Africa needs digital infrastructure for its  Micro, Small, and Medium Enterprises, MSMEs, to leapfrog development, create jobs and accelerate economic recovery post-Covid-19.

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

She noted that in March 2019, a study published by Boston Consulting Group projects that digital marketplaces operating in Africa like Jumia can create an additional three million jobs by 2025.

According to  Anammah, by 2050, two in every five children will be born in Africa and the average age is 19 while 77 per cent of the population is under the age of 35.

She  said: “According to Brookings Institute, 70 per cent live below the global poverty line. Africa is also experiencing rapid urbanization with rural dwellers moving to the few mega cities and placing enormous pressure on the physical, political, economic and societal 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.

“Jobs in Africa today come from MSMEs. Of the 418 million people employed on the continent, 83 per cent are employed by MSMEs.

“Africa has 85 – 95 million MSMEs and of these 96 percent are micro enterprises and half of them are engaged in Trade. Eight – seven percent of African MSMEs are in 10 African countries including Nigeria with 77 percent of the total African GDP.

Digital infrastructure

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

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She said: In six African countries like 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 per cent and projected to be 67 per cent by 2025. This digital infrastructure is an asset which Africa can leverage to leapfrog development, create jobs and accelerate economic recovery post-Covid-19.

How facilitating MSMEs into digital economy will drive economic growth

Anammah  reiterated that facilitating MSMEs transition from offline into the digital economy will drive economic growth and jobs in Africa.

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

World Bank Group President, David Malpass said: “In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-COVID, by allowing capital, labour, skills, and innovation to move into new businesses and sectors.

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

For this to succeed Africa also needs the supporting environment for the digital economy to thrive and these include Policy framework and the Right narrative.

According to  Anammah,  Policy Framework has to do with the use of fiscal measures to incentivize African Trade and MSME trade in particular to shift from largely offline/ cash based informal economy to formal and traceable digital platforms.

In the Right Narrative, she said African media needs to support the digital economy and companies operating in that space in order to see successful outcomes and achieve the development needed. This can come in the right narratives that will encourage investment into the sector.

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Source: Vanguard News

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