By Philip Amoateng
This week Rwanda welcomed the fourth edition of the ‘SME and Banking Africa Forum’ at the landmark Kigali Convention Center. The theme of this year’s forum, which brought together business leaders, financial institutions, a selection of innovative start-ups and SME development experts, was ‘Unlocking the potential of African businesses’. This theme was, I believe, timely in nature.
The consensus that has been arrived at both the national and continental level is that trade, not aid, will be the driver of our development agenda and the various discussions at the Forum only reiterate this fact. One of the topics that was tackled at the very beginning of the three-day meeting was ‘How innovation and technology accelerate SME growth’.
As a major player in the local innovation and technology scene, we have seen just how linked SME (small and medium sized enterprises) growth and technological innovation is. As a company, we are dedicated to two major goals, increasing digital and financial inclusion. Local SME’s have been the direct beneficiaries of this.
According to experts, SME’s account for more than 95% of businesses in African economies through job creation, employment, tax provision and contribution to Gross Domestic Product (GDP). However, various challenges hinder SME growth in our continent. These challenges range from electricity shortage, lack of capital, poor management skills, inadequate information and corruption.
While the Rwandan government is rightly lauded for its support to SME’s (and bigger businesses such telecoms) through its Doing Business reforms, there is still a lot of work that needs to be done in order to allow SME’s to thrive in the country. And everyone has a role to play.
As noted earlier lack of capital, poor management skills and inadequate information is a huge hindrance to SME growth. Thankfully, technological innovations give us many solutions to these challenges. For example, as Tigo we have made it our mission to ensure that not a single Rwandan is outside the formal banking sector and we are doing this through our various mobile financial services.
One of the solutions that we are particularly proud of is the digital group savings solution. This platform allows unbanked local savings groups (Ibimina) to digitize. Experience shows that these informal rural savings groups often become SME’s, especially as they grow their membership and working capital. In addition, because these Ibimina have a footprint in the formal banking sector, they are able to access capital from formal financial institutions because these institutions can see the group’s transaction records.
I like to say that “if you want to know something, just go to Google”. Many of the solutions to the challenge of poor management skills and inadequate information can be found online. That is why we believe so much in digital literacy. With just a 3G/4G handset a small business owner or farmer is able to access whatever information they need to expand their business. Are you a Rusizi farmer who needs to figure out what the price of maize in Kigali is? You can find that information online. Do you want to take a short course in project management? E-learning tools are ubiquitous online. Do you sell your delicious homemade pili-pili sauce? Find customers online.
What our company aims to do is democratize the digital space by ensuring that even the least among us has the opportunity to enjoy the digital lifestyle.
In addition to the trickle-down approach to both digital and financial inclusion, we realized that a more hands-on approach was also needed. That is why we decided to fund startups through the Tigo Digital Changemakers competition; this year three young innovators will win Frw 8.2 million each. We came to the realization that many great ideas were perishing due to lack of capital and we decided to step in a play an active role.
Through this competition that we organized with our partner Reach for Change, local SME’s such as Family Wallet and iSOKO were nurtured.‘Family Wallet’ is a digital application that helps informal workers save a portion of their earnings. It also tracks their income and expenses to help them build credit, access loans and create a better life for themselves and their families through access to financial services. ‘iSOKO’ is a virtual marketplace to help low-income workers not only to earn more income, but also to lay the foundation for them to build credit so that they can access small loans to help their families and send their children to school.
Philip Amoateng is the CEO of Tigo Rwanda