Measuring African MSMEs' Resilience
New Surveys from Facebook and Africa 118/GeoPoll shows Africa's small businesses are faring better and relying more heavily on technology as the pandemic wanes
In the past weeks, two organizations have released notable survey findings showing how small businesses in the Middle East and Africa are faring as we emerge (however tentatively) from the global pandemic.
Generally, the picture gleaned from the two surveys is cautious optimism. Conditions are improving, but omicron was at best a nasty speed bump on the road to recovery. Without question, the pandemic inflicted real damage and businesses continue to struggle with demand, cash flow, access to capital, and other challenges.
One survey comes from the global social media giant Facebook, which recently released its new Global State of Small Business Report. The latest report reflects data collected in January 2022. The Facebook survey includes a large sample from countries in the Middle East and Africa.
The other comes from Africa 118, a Nairobi-based digital marketing platform, which, along with survey platform GeoPoll, produced the Africa MSME Pulse Survey, which surveyed 312 MSMEs in South Africa, Nigeria, and Kenya in December 2021.
We will avoid comparing the two surveys directly since they use different methodologies and sample sizes. Each does offer insights into the current state of small businesses in the region in the early (let’s hope) post-pandemic period.
Instead, we will share the highlights from each survey. And we include links to each report so dig further on your own if you choose.
The Africa MSME Pulse Survey
The Africa MSME Pulse sought answers to a handful of key questions. These include, among others, how MSMEs were impacted by the pandemic, how optimistic they are about the future, and the role digital marketing and technology play in their current and future business plans.
The bottom line is that MSMEs were battered but not defeated by the pandemic. And there has been a fundamental shift in the role technology plays in their business operations.
For example, three-quarters of MSMEs said Covid had a negative impact on their business. Kenya was highest at 81% and South Africa lowest at 70% (still very high).
And 57% of those surveyed said they had to let staff go or cut salaries over the past two years. And it doesn’t appear that MSMEs are going to bring those employees back any time soon, as the following chart shows. The MSME employment outlook appears to be the brightest in Nigeria.
On the plus side, MSME optimism is on the rise.
The following chart shows that overall, 27% express extreme optimism for the future. And again Nigeria seems to have the sunniest outlook, with 31% of the MSMEs surveyed in that country saying they are extremely optimistic.
Probably the most notable and unique piece of hte MSME Pulse survey involves how technology has and will continue to transform how MSMEs operate. And the role Covid played in that transformation.
For example, 72% of MSMEs said their reliance on digital tools and technology has increased over the past two years. Again, Nigeria stands out here at 81%.
Watch the full BigFive Digital webinar featuring Africa118 and GeoPoll
And MSMEs indicate they plan to invest in a wide range of technologies to support their businesses over the next three months. Leading the field are websites (39%), followed by computer hardware (27%), eCommerce tools (26%), accounting (16%), and fintech (12%) tools. Nigeria stood out for eCommerce adoption at 39%, versus just 15% in South Africa.
SaaS tools, for everything from sales to eCommerce to payroll, are increasingly popular among African MSMEs. Already 46% of MSMEs make use of SaaS, with Kenya leading the pack at 56%
Sales/CRM is the most widely used at 37%, with website design and eCommerce coming in second at 32%.
Again, responses varied by market. Nigerian MSMEs were more focused on websites/eCommerce (45%) while Kenyan MSMEs favored CRM. South African small businesses seem more focused on the back office, with 33% using accounting/billing/finance SaaS tools.
And finally, Africa MSMEs plan to invest more in digital marketing in the coming year.