MSMEs: Africa’s Greatest Economic Drivers

MSMEs play a vital role in the economic development of African countries. SMEs account for a majority of businesses in Africa.

In Nigeria, MSMEs contribute 90% of GDP while in South Africa, small enterprises employ 50–60% of the total workforce.

A recent study financed by the UNDP on Urban Micro-enterprises in Angola estimated that more than 50% of the population survive from informal sector businesses.

Jumia, an e-commerce platform founded in 2012 in Lagos, Nigeria is providing more than 5,000 jobs through small businesses and logistics partners.

The e-commerce platform is reaching people in rural areas and giving them access to its extensive products and logistics. Jumia also enables over 110,000 sellers, including local African companies & entrepreneurs to reach new consumers by opening new distribution channels and grow their businesses.

African Leadership Academy in South Africa is making an impact across 46 countries in the Africa continent through catalyzing transformative change.

The ALA alumni have founded 177 ventures that thrive in 35 countries across the world, creating 499 quality jobs. ALA’s Anzisha prize, a premier award for young African entrepreneurs, has recognized and awarded 82 entrepreneurs from 28 countries across the continent. These young entrepreneurs have collectively received over $495,000 in cash prizes to invest in their ventures.

East African software developers BRCK focuses on making the internet accessible to everyone and providing the tools to take advantage of the digital economy.

BRCK exists to connect Africa to the internet, removing the barriers to connectivity to increase economic opportunity. The Kenyan startup makes specialised hardware routers that can supply Wi-Fi even without a steady power supply which is a major problem in African countries.

The critical contributions of MSMEs to broader social-economic objectives include their contribution to GDP, job creation, and taxes. Job creation through MSMEs often benefits the poor thereby reducing poverty, increasing income, and positively impacting household investments in education and health over time.

MSMEs also contribute immensely to government revenues through the taxes and duties they pay. In Sub Sahara and Middle and North Africa(MENA), they contribute 14.8% and 8% of tax respectively.

Despite the significance of MSMEs to the economy, they face difficulties as a result of lack of finance, the multiplicity of tax, inadequate skills, and training. MSMEs need support to continue the strengthen their enormous contributions in Africa through grants, loans and capacity building.

At Spurt, we are a platform that convenes, develops, and excites the best young African thinkers who are passionate about working for the economic development of their continent. We are facilitating a new wave of growth by enabling local SMEs. Our objective is to help build local large companies with sufficient scale and capacity to add value locally and regionally.