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Elevating the SMME sector is key to ensuring long-term economic viability in Africa

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David Mparutsa, Head of Enterprise & Supply Chain Development at Absa Regional Operations
David Mparutsa, Head of Enterprise & Supply Chain Development at Absa Regional Operations

Despite commendable efforts and interventions by various state and private sector entities, there is no silver bullet to how economies across Africa and the small and medium enterprise sector will recover from the global health pandemic.

 

Across the continent, we see a K-shaped recovery as different economies and sectors recover at differing rates from the worst effects of COVID-19 through stimulus packages and global support funds. Countries that acted early and decisively and have the mechanisms to channel support to sectors in critical need of assistance are better placed to lead the recovery. From a business perspective, sectors such as tech and telecoms are running ahead while leisure and tourism and aviation have a long road to regain lost ground.

 

Simply put, one year on from the pandemic, there is no linear or homogenous road to economic recovery.

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So, where does this leave the critical SME sector in Africa?

According to the African Development Bank’s report African SMEs Through COVID-19, small and medium sized enterprises (SMEs) account for more than 90% of businesses and almost 80% of employment in African economies. The majority of these enterprises are to be found in the informal sector. Small business owners, particularly in the informal sector, can start afresh and pivot their business offerings according to the market needs.

 

But this adaptability and agility – the very qualities that make SMEs such a feature of the African economic landscape – are also the sector’s biggest Achilles heel. Anyone with an idea, the drive and the perseverance can start a small business in support of their families and even communities, but by its nature, it does not lend itself to long-term sustainability.

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A 2020 Catalyst for Growth report found that the impact of the COVID-19 pandemic was felt to a far greater extent in emerging markets due to SMEs in these markets being constrained by institutional inadequacies.

Depending on the scale of the SME, when COVID-19 hit, some were unable to pay their own and employee wages, others were forced to retrench staff, while many were unable to meet financial obligations as they were not prepared and equipped to withstand such a tremendous economic shock.

 

SMEs with very little in the balance sheet in terms of investments or liquid assets and highly geared struggled for survival during the pandemic. It goes back to only borrowing money for necessary projects and where the business owner has a line of sight of cash flow to service that debt.

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The April 2021 AfDB report African SMEs Through COVID-19 stated that in addition to immediate support and relief measures, governments should also “consider mid-to-long term structural policies for African SMEs that would enhance their resilience after the crisis”.

 

Key recommendations include:

  • strengthening awareness of opportunities for SMEs,
  • investing in skills and capacities,
  • speeding up the adoption of digital technologies, and
  • strengthening credit reporting institutions.

 

The way back from the brink

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Education to support the SME sector will be crucial, and this is where corporates such as Absa Bank play such a critical role through enterprise supply chain development programmes and supporting initiatives.

 

Africa is a vibrant and growing economic pot but still subject to regular economic shocks and bouts of turbulence, be that due to political instability or natural disasters.

 

The SME sector, in particular micro-enterprises, will have to learn the importance of contingency reserves and a culture of saving instead of a hand-to-mouth approach, which leaves zero room to manoeuvre and too exposed to external factors.

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SMEs can adapt to changing circumstances, but the sector needs to incorporate contingency and succession planning as critical parts of its make-up. In addition, adequately documented procedures which allow your business to continue to operate in your absence as well as optimal stocking and resourcing levels to drive efficiency will have to become part of the fabric of the SME sector.

 

During the pandemic, Absa provided financial assistance in payment relief to at least 670,000 customers in Africa, with approximately US$72m dollars in cash flow relief provided to our retail and business banking customers. In Ghana this included repayment moratorium of up to six months to businesses who have been impacted by COVID-19 and a reduction in lending rate by 2% on qualifying SMEs.  We also incentivised the use of digital channels for convenient and safe transaction; in a market like Ghana, this translated into some fee waivers for online transactions.

 

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Furthermore, we provided counsel to small business owners and through our business development support programmes such Absa SME Clinics, Absa Business Connect series & Absa StartUp Training sessions, designed to upskill and empower SMEs.

 

Meaningful support of this critical economic sector requires multi-stakeholder involvement from both the public and private sectors.

 

The economic green shoots of recovery can be seen all over the continent in key data points such as the GDP outlook, which the African Development Bank predicts will grow at 3.4% in 2021, as opposed to a contraction of 2.1% in 2020, and there has also been a solid rebound in commodity prices. Allied to that are vaccine roll-out programmes, which will help boost confidence in various economic sectors.

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As a small business owner can adapt quickly, it is imperative that SMEs keep their ears close to the ground in terms of sector recoveries and quickly try and plug into those sectors that are potentially doing well and leading the economic recovery. Understand what your business can offer and link into the value chains of large firms in those sectors, maybe as a supplier or as a distributor.

 

The opportunities will be there. However, the SME sector will need to be agile and increasingly resilient in ensuring its long-term sustainability and ability to withstand any future shocks.

 

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By David Mparutsa, Head of Enterprise & Supply Chain Development at Absa Regional Operations

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People & Lifestyle

Africa Games Armwrestling: Golden Arms to grab Golden Gold for Ghana, receives boost from NHIS, HD+, KOFATA and others.

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The National Armwrestling team, Golden Arms has set an ambitious target of securing a third of Ghana’s total medal haul at the forthcoming Africa Games scheduled for March 08 to 23,2024.

Coming into the Games for the first time, the Golden Arms are poised and ready to make history again in order to add up to Ghana’s medal haul towards its host and win agenda.

Mr. Charles Osei Asibey, President of the Ghana Armwrestling Federation (GAF) said the team being  in camp since February is unprecedented in their preparation for any major championship thus super ready to deliver at the continental stage on promise.

“We are ready to give the rest of Africa a tough competition as always. We have medals targets for Ghana, my hardworking team has had enough preparations and I am convinced they will show up to put up a good show.”

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Currently in camp at Legon, the Golden Arms have received major boost from the Armwrestling board, development partners National Health Insurance Authority (NHIA) through their sports is good health agenda spearheaded by CEO Dr. Oko Boye, SES HD Plus through the Kids Armwrestling future champions program, Kofata Motors, the Ghana Olympic Committee (GOC) through the federations support, Minister and Ministry of Youth & Sports who ensured Armwrestling is well placed, the Local Organizing Committee and friends, all to get the team thrive at the 13th Africa Games in Accra. The various support directed towards training equipment, medics, team preparation, kitting and other logistical needs.

Mr. Osei Asibey urged Ghanaians to rally behind the team as they go in to conquer the rest of Africa on March 15 and  16, 2024 at the Cedi Hall, University of Ghana.

The Ghana National Armwrestling Team, the Golden Arms having dominated the continent for the past yeare, will hunt for Gold and bring Ghana that glory it deserves.

Source www.ghanaarmwrestling.org

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Holy Child alumni illuminate the path forward amidst national school power crisis

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HOPSA SOLAR PANEL 1

In recent times, the narrative of power challenges in Ghanaian schools has escalated, with numerous public institutions such as Mfantsipim School, Accra Academy, and Mondo Senior High Technical School among others facing abrupt electricity disconnections. 

This persistent issue highlights the dire need for sustainable solutions in powering educational facilities, crucial for maintaining the quality of education.

Stepping into the spotlight with a pioneering initiative, the 1999 alumni of Holy Child School have set a remarkable precedent.

 In a bid to combat these electricity woes, these visionary women have successfully funded the transition of their alma mater to 75% solar energy. This initiative not only addresses the immediate problem of power outages and financial strains on the school’s budget but also serves as a beacon of climate-positive action with the potential for carbon credit benefits.

Founded in 1946 by the Society of the Holy Child Jesus, Holy Child School has long stood as a bastion of educational excellence and societal impact in Ghana. Its alumni include distinguished personalities such as Ghana’s Ambassador to France, Anna Bossman; Goldman Sachs Vice President, Sabina Dankwah; and University of Ghana’s Vice-Chancellor, Prof. Nana Aba Amfo, to name a few.

The Solar Project

This solar project, a gift from the 1999 alumni commemorating their 25th anniversary and coinciding with the school’s 78th speech and prize-giving day, symbolizes a profound act of giving back and forward.

 In an exclusive interview with the Business and Financial Times, engineer Ing. Mrs. Sheila Enyonam Akyea, president of the year group, shared:  “This project builds on the foundation laid by our predecessors. We’re thrilled to extend their initial contribution, ensuring every corner of our school benefits. It’s our way of ensuring current and future students receive the same level of empowerment and opportunity we had.”

Project’s Committee Chair Ing. Mrs. Teresa Kyei-Mensah, mentioned the substantial investment the solar installation demands, emphasizing ongoing fundraising efforts.

she said: “Once completed, the initiative promises significant savings for the school and, by extension, the Ghana Education Service, redirecting funds towards essential educational resources,” she added.

Solar power, increasingly recognized for its affordability and environmental benefits, stands as a viable solution for Ghana’s educational sector and its broader climate goals. With abundant sunshine year-round, Ghana is ideally positioned to harness solar energy, reducing the financial burden on public resources while contributing to global carbon reduction efforts.

The project was completed in January 2024 after a 1-month testing phase. The year group eagerly anticipate the handover ceremony at the 78th Speech and Prize-Giving Day of Holy Child School in Cape Coast on Saturday, 9th March 2024 marking a significant milestone in their commitment to sustainable development and quality education in Ghana. 

This initiative not only lights the way for other schools grappling with similar challenges but also underscores the powerful impact of alumni engagement in shaping a brighter future for the next generation.