How tech can impact Nigerian start-ups and SMEs

When an entrepreneur starts a business, he may see an SME and a start-up differently. According to an article published in University Lab Partners website, a start-up is a company that is in the initial stages of operation but expects significant growth in the near future, while a small and medium enterprise (SME) is any kind of business that only has certain number of employees, the maximum which differs by industries.

According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) survey of 2017, there are about 41.5 million micro small medium enterprises (MSMEs) in the country. Also, a 2018 report by the National Bureau of Statistics (NBS) and the SMEDAN, SMEs in the country contributed an average of 48 per cent of the national Gross Domestic Product (GDP) in the last five years of the publication of the report.

Furthermore, a 2020 paper by Professor Banji Oyeyinka titled ‘SME: Issues, challenges and prospects’, revealed that 96 per cent of Nigerian businesses are SMEs compared to 53 per cent in the US and 65 per cent in Europe. The paper also noted that Nigerian SMEs, which are distributed in clusters within regions, represent about 90 per cent of the manufacturing and industrial sector in terms of number of enterprises.

Oyeyinka’s paper classified Nigerian SMEs into two main categories: the low-tech sectors, comprising businesses like clothing and garments, agro-processing, etc and the high-tech sectors, comprising businesses like information and communications technology (ICT), telecommunication, biotechnology, etc.

In today world, in order to stay ahead of the competition as a start-up or an SME, technology is vital. On the other hand, Nigerian SMEs invest comparatively little in technology, and when they do, they acquire equipment and software that are inappropriate. Most times, this is because of lack of fund or because they do not know the right technological tools they need or because they do not even know they need technology for their businesses.

 

Nigeria’s technopreneurship and tech ecosystem

With the way businesses and industries are being carried out across developed countries, Nigerian entrepreneurs and technopreneurs have been advocating for system through which they can network and synergise in order to be on par with their counterparts across the world.

Ayoola Falola, the founder of PageCarton.org, a web and software development company, succinctly defined technopreneurship as the adoption of a useful technology of today and that of the future for creating a viable business.

Oluwamayowa Oshidero, the founder of DABGS.com, an online community where SMEs and enterprises can get courses and other resources to grow their businesses, basically described technology ecosystem as a cluster formed by those playing at different parallels of the technology-hinged value chain.

Perhaps the need for a vibrant technology ecosystem and its importance to small businesses became more pronounced when, in October 2017, Facebook launched the first African SME Council in Nigeria. At the launch, one of the members of the council, Ifeanyi Azubike, while stressing the significance of an effective technology ecosystem that would support small businesses, noted that it was difficult for the government to support SME funding, adding that, “The SME Council is therefore a good initiative that will boost the growth of SME ecosystem in Nigeria and Africa.”

On the other hand, some people are not comfortable with the way the Nigerian technology ecosystem is being built or run by foreigners. Abasiama Idaresit, the founder of Wild Fusion Limited, is one of them. In his 2018 Tech Cable article titled ‘Why Nigeria’s tech ecosystem shouldn’t be exclusively built by foreign capital’, he noted that technology is powerful and has much impact on a people and society. “This is why, as a people, we must think, deliberate and work towards our technology autonomy and future.”

 

How tech can help Nigerian start-ups and SMEs grow

Pankit Desia, in his Inc42 article titled ‘How technology is moving start-ups beyond conventional tactics, noted that in today’s world, technological changes and advancements have made some business models obsolete.

“Whether it is using IoT enabled consumer durables or AI backed televisions, new-age tech has touched every aspect of our lives,” Desai said. “It’s no surprise that businesses in every sector are relying on technology to grow faster, reach more markets and acquire new customers at a breakneck speed.”

At the October 2017 Facebook’s launching of the first Africa’s SME Council in Nigeria, Facebook’s sales manager for Europe, Middle East and Africa, Abi Williams, noted that the initiative was designed to provide better digital tools for business and customers’ growth, and that with a vibrant SME sector, Nigeria is a natural choice in launching their first SME council in Africa. “With 35 million people in other countries connected to a Nigerian business on Facebook, the global market has never been closer to Nigerian SMEs,” he added.

Ayodele Olusegun, the chief executive officer (CEO) and lead developer of FireSwitch Technologies, noted that technology could help Nigerian small businesses by giving them wider access to both local and global markets, and also better planning and decision making.

Olumide Omotoso, the CEO of ByteLabs Technologies Limited, a company that creates fintech solutions and telecommunication products, opined that technology offers limitless growth opportunities to Nigerian businesses, especially the small one, in terms of marketing, innovation, information and competition. “This way, the global playing ground is levelled in some specific areas. So, Nigerian entrepreneurs and businesses can have access to most of the available information as their counterparts in other countries,” he added.

 

How tech is impacting some Nigerian start-ups and SMEs

Sandra Melo, in her mydatascope.com article titled ‘How digital technology can help SMEs to stay afloat? highlighted 10 ways digital solutions can assist the growth of small business. Some of them include digitalisation, effective remote work monitoring, ICT, improved relationship between all actors involved, enhanced productivity, improved data management, among others. “Many of those technologies already exist, you just have to take advantage of their benefit,” she said.

Olugbenga Ogunbowale, the founder of Epower NG noted that in five years, he sees himself driving the growth of SMEs across Africa through ICT and policy, adding that since the inception of the company, it has trained over 3,000 youth in Nigeria in digital skills through their work with brands like Google and Facebook. “Epower recently launched a new start-up called Grant Master. Grant Master is working to make application for business funding very easy for entrepreneurs,” he said.

Falola stated that technology had been an enabler for many of their ventures and had helped them to serve their community better and easier. “During the pandemic, when businesses were laying off staff due to their inability to engage their staff in profitable ventures, we recruited more people because we could leverage technology to serve more people,” he said.

Oluwamayowa said that technology is at the centre of what they are offering to their clients and to the society. He further said that with digital concepts and ideas, his company had helped SMEs develop their businesses. “We, leverage technology by building online platforms that have a lot of tools and features that makes it easier for entrepreneurs to access the things they need to grow,” he added.

 

How tech-enabled Nigerian small businesses can contribute to the economy

Nigeria’s current economic and security situation has mounted a lot strain on virtually all businesses in the country. High cost of production, unemployment, inflation and recession has frustrated many small businesses, which in turn hamper them from growing and contributing to the economy the way they should.

Sean Bryant, in his November 2020 Investopedia article titled ‘Why many startups fail and why’, revealed that the failure rate of start-ups was 90 per cent. The study concluded that 21.5 per cent of start-ups fail in the first year, 30 per cent in the second year, 50 per cent in the fifth year, and 70 per cent in the 10th year.

Notwithstanding, this past August, during the MTN Business Revv programme, the Minister of Communications and Digital Economy, Dr Isa Ibrahim Pantami, stressed the importance of small businesses to the country. He stated that a focus on growing the national digital economy will improve the country’s traditional economy and will enable Nigeria get a slice of the global digital economy, which Oxford Economics valued at $11.5 trillion dollars or approximately 16 per cent of the global economy.

 

Challenges facing tech-enabled Nigerian start-ups and SMEs

A 2019 research paper by Sunday Eze and others investigated the challenges facing SMEs in emerging ICT adoption from diverse actors’ perspective. Their findings revealed that the challenges range from poor ICT, poor ICT support, lack of specialised skills, limited funding, etc.

Olusegun of FireSwitch Technologies opined that government policy and lack of basic technological resources are the main challenges. “Quality internet services, unstable government policies, lack of access to capital and talents are frustrating small businesses in the country,” he added.

Omotoso of ByteLabs Technologies Limited noted that the major challenges include epileptic power supply, unreliable internet services and general non-conducive business environment. “The challenges are real. Nigerians should patronise local businesses and contents,” he said.

Perhaps, one of the striking things the minister of communications and digital economy said in that MTN Business Revv programme as regards how the challenges faced by Nigerian small businesses could be managed was when he commended the leaders of MTN for development of Nigerian digital economy by providing capacity building for SMEs. “We encourage other organisations to also channel their corporate social responsibility (CSR) efforts towards supporting in the implementation of our national digital economy policy and strategy for a digital Nigeria,” he said.

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