- By Tosin Eniolorunda
Change is sweeping across Africa, rippling through economies – formal and informal.
People are being empowered to achieve their dreams amid the digitalisation of payment processes and improved access to credit.
The introduction of payment terminals; more ubiquitous smartphone apps; and the hidden analytical power of the data they provide is releasing the pent-up ambitions of people across Africa – in countries embracing these market-generated solutions.
The personal stories are beginning to surface: hope leading to achievement; perseverance bringing hard-earned success – showing change in Africa is real, tangible and has a genuine momentum. But the speed of change can be quicker, which will bring more rapid benefits to the masses.
Every government that desires more participation in its economy and for its citizens to prosper – can do more to help. It need not require allocating hundreds of millions from national resources. Rather, the changes can be self-funded by participants irrespective of status or wealth, as regulations limiting digitalisation’s potential are swept away.
This is best achieved via regular, meaningful dialogue with entrepreneurs already delivering successful products and services. Africa’s fast-growing, dynamic, start-up sectorproves the appetite of entrepreneurs to create new markets, or open up existing ones, generating exciting economic growth.
By clearing a path for tech start-ups to introduce new solutions and access customers, major development gaps can be overcome and new economic opportunities created. These gaps include access to finance, agricultural productivity, logistics and supply chains, clean energy, health, and education.
In Nigeria – Africa’s most populous nation – I have seen the changes for myself. Nigeria is home to c. 40 million MSMEs – of which almost 90% are in the informal economy – contributing over 50%of national GDP.
The scale of the informal market, and the inventiveness of its leaders, is undeniable. They are your neighbours, friends and family – embracing side hustles to supplement their incomes. Until recently however, bank accounts were rare; record keeping was poor; and data almost non-existent – limiting opportunities to scale and grow. This has now changed through POS, bank transfers, and smartphone payments – widening access to the financial system.
Being able to store the value of money without holding or travelling with piles of cash is liberating. Similarly, digital payments allow entrepreneurs to access reliable evidence showing trade levels and frequency, making it easier to obtain credit – for growth. Credit demand has never been in doubt, but traditional banking systems have often struggled to fulfil/supply it.
Access to credit means sole traders can purchase more stock to sell-on; recruit support staff to expand; lease transport to deliver goods, and rent new premises as a stall becomes a flourishing business.
A tangible example: the farming ‘yield gap’ (defined as the difference between yield potential and average farmers’ yields) is 90% in Africa. This means Africa could both (i) feed itself and (ii) comfortably export produce – if farmers could invest in increasing their yield. Now, thanks to mobile money technology, accessing credit lines has never been easier and more ubiquitous. This transforms farmers’ opportunities to invest, closing the yield gap.
The trend towards cashless money in Africa is firmly embedded. From 2012 to 2021, mobile money accounts have grown from 30 million to 560 million – a growth rate only accelerating as systems become faster, more reliable and more flexible.
Transformative changes are evident across Africa – but there is no single or homogenous Africa. Each country is unique; their communities all have small local traders at their heart; and entrepreneurs wanting to do the best for their families. Breaking down the barriers to change will transform their lives.
Every government, every official should support this effort – driving the change that is in everyone’s interests to make happen.
- Tosin Eniolorunda is Group CEO of Moniepoint Inc.
