The SME landscape in Africa has proved a tough one, especially for those owned by female entrepreneurs. With many of these businesses having to contend with economic, political and literal storms, it has become an untenable situation for many.

Despite all this, these SMEs often form the backbone of many African economies, and in the case of South Africa, are vital in enhancing our country’s development and status as being investor-friendly.

Aida Diarra, SVP and group country manager for Visa Sub-Saharan Africa, asks whether resilience and grit enough to sustain and grow this vital sector of the market?

“There are two critical fundamentals lacking in many African SME’s – adequate tools and training and access to distribution,” she stresses.

Outlining the benefits

Diarra believes that the quickest and most effective way to unlock the digital opportunities available to assist these businesses is to enable them through digital payments.

“Electronic payments have an important role to play for entrepreneurs by improving the speed and reducing the costs associated with transacting with employees, suppliers and customers,” the Visa exec notes.

According to Diarra, the three benefits that digital payments offer SMEs given these uncertain times are:

  • Increased access to consumers, especially those who may want to trade with them online. Africa is set to add 1.3 billion people to its population by 2050, due to the region’s growing consumer base, many global leaders agree that Africa is increasingly important to a wide range of economic, security, and political goals
  • Enablement of lenders to gain visibility into how businesses are doing and give lenders insights into how they might finance small businesses from a working capital perspective
  • Provision of a similar capability to that provided to larger organisations by ERP systems to help them better understand and manage their supply chain.

A shifting mentality

Diarra also notes that there has been a shift in thinking when it comes to digital payments, as the “cash is king” mentality is slowly being eroded in many countries on the continent.

It’s part of the reason why Visa has entered into a formal agreement with the Ivory Coast government to digitise its services and extend financial services in the country, the exec explains.

“The signing of this MOU represents an important milestone in Visa’s efforts to bring more African entrepreneurs into the formal financial system, with all the associated benefits. The use of electronic payments brings greater payment security and convenience while lowering costs and bringing increased transparency to the financial system,” says Diarra.

Another African country turning to digital solutions is Egypt, with its ministry of planning, follow-up and administrative reform signing a cooperation agreement with Visa. The agreement aims to encourage entrepreneurship, supports the implementation of Egypt’s Vision 2030 and mechanising services such as its e-payment system.

Growth in fintech

Along with governments looking to digitise systems, Visa has seen a growth in fintech services, especially as the growing number of unbanked people on the continent have resulted in a desire to have more new solutions developed to tackle old problems.

“Companies, such as Visa, have begun to embrace Fintechs because they are essential to helping us extend our footprint and our product offering. We are also seeing many more Fintechs coming into the ecosystem with really creative solutions. Solutions that are essentially ‘in-a-box’, that help make it simple for entrepreneurs to start, fund and run their businesses,” adds Diarra.

Lastly the Visa exec points to a recent World Bank Development Research Group report which revealed that integrating digital payments into the economies of emerging and developing nations addresses crucial issues of broad economic growth and individual financial empowerment.

“The diversity, energy and dynamism of the African continent, coupled with solid financial technology will play a critical role in bringing sustainable and inclusive economic growth. At Visa we want to continue to inspire, invest and empower SMEs across Africa,” concludes Diarra.