Growing a Sustainable Economy through SMEs



By Gbenga Sumonu

Hundreds of small businesses in Africa fold up within their first year of operation, according to empirical studies, a situation that has spurned enormous research to unravel the causes, and to proffer appropriate solutions. The major cause, said Ethel Nyembe, Head of Small Enterprise at Standard Bank, is poor forward planning and lack of attention to the financial details that are vital to build a successful enterprise. And to reverse this trend requires considerable empowerment of operators in the Small and Medium Scale Enterprises (SMEs) segment, applying a multi-pronged approach, she stated.

Nigeria presents a peculiar case. Despite its huge size, the country’s SME sector remains largely underdeveloped. Among notable barriers hindering its growth include undercapitalisation and lack of access to bank facilities; poor infrastructure and dearth of skilled manpower; low level of entrepreneurial skills; limited market access, multiple taxation, unethical practices and cumbersome bureaucratic wedge. Probably most damaging, until recently, was a seeming lack of strategic intervention by government.

SMEs are the engine of growth in many economies. Their importance lies in the capacity to generate employment and wealth, engender poverty alleviation and improved food security, all contributing to significant export earnings and Gross Domestic Product (GDP). These outcomes accrue from an increase in trading, manufacturing, agricultural productivity and generation of market surpluses, as well as improved access to markets, which a well-organised SME industry stimulates.

Recognising the untapped growth potential and huge economic returns derivable from developing the sector, private sector players, led by banks, have taken the plunge. Nigeria’s current economic predicament, it is believed, provides an additional impetus to focus on the SME space and to support government’s drive to diversify the economy.

Google, Stanbic IBTC Partnership


Some remarkable interventions are noteworthy. Recently, it was announced that Stanbic IBTC Bank and foremost technology company, Google, are collaborating to empower operators in Nigeria’s SME sector via acquisition of digital skills for economic advancement. The thrust of their collaboration, the parties announced, is to facilitate capacity building for SMEs in Nigeria, to help entrepreneurs accelerate their businesses, support digital education initiatives geared towards job creation as well as address key challenges confronting SMEs as earlier highlighted.

Under the initiative, Google aims to digitally train one million youths and another 1,000 SMEs by Stanbic IBTC in one year, with diligent execution, enhancing the prospect of triggering an exponential change in the SME value chain in Nigeria. The ultimate objective, Obinna Ukachukwu, Head of SME Banking at Stanbic IBTC Bank, stated, is to enhance the adoption of digital technology and enhance the growth of the digital economy in Nigeria.  During the first workshop in Lagos on July 19, over 250 participants cutting across the SME spectrum took part, with experts drilling them on the benefits, skills and value of digital marketing. While Google provided the content, trainers, learning assessment and certifications required for the training, including resource materials for further learning and development, Stanbic IBTC Bank, which is steadily evolving as key player in the SME segment, selected the participants, who were drawn from various sectors of the economy.  Specific issues addressed at the session included understanding e-Payment and Online banking; using digital platforms to grow businesses; and hiring and retaining third parties.

What makes this collaboration an exciting prospect is the pedigree of the partners, as well as the impact of digital technology on business success. Since it was founded in 1998, Google, with brand value estimated at $82.5 billion in May 2016, has studiously maintained its mission “to organize the world’s information and make it universally accessible and useful.”

Google’s phenomenal growth had resulted in the introduction of a chain of products and high-profile acquisitions and partnerships that have largely taken its remit beyond a search engine, to include advertising, operating systems, platforms and enterprise and hardware products. The company’s foray into capacity building initiatives in Africa stems from a simple perspective that: “The internet is at the heart of economic growth and the Digital Skills Program is aimed at helping more Africans play a part in the digital economy. Everyone can succeed online, start a new business, grow their existing one, or share their passion,” said Juliet Ehimuan-Chiazor, Country Manager, Google Nigeria.

Stanbic IBTC Bank is part of the Standard Bank Group, Africa’s largest financial services group, with operations in 20 markets across the continent. With focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management, the group has in 153 years of existence logged an impeccable reputation as a financial services powerhouse. Among its many ‘firsts’ Standard Bank was the first bank on the diamond and gold fields in South Africa, the first commercial bank to launch an Automated Teller Machine (AutoBank) and first to establish a full electronic branch. Such rich heritage has impacted on Stanbic IBTC via support in such areas as staff training, provision of information technology upgrades and best practice processes as well as strong corporate governance practices.

The focus on digital empowerment of SMEs is understandable. Given the rapid pace of change that the digital economy requires, remaining competitive through adoption of appropriate skills is imperative for survival and success. Globalisation has created fresh opportunities and ideas, opened new markets and fostered greater access to technology, which are all accessible to every business and economy, unlike the early days when the benefits of globalisation accrued mainly to developed economies.

Every business, regardless of size and sector, can harness digital technology to achieve sustainable growth. The adoption of new technology and related investments, even to drive specific aspects of a business, can bequeath the sort of niche that is not often available to big enterprises. Besides, it is believed that the rules of competition are set by businesses that hug and deploy digitisation in the right places and at the right time.

Mitchell Elegbe, CEO and founder of Interswitch Limited, speaking at the second edition of the Stanbic IBTC Business Leadership Series, emphasised that there are huge opportunities for African companies in the digital and innovation space. All they require is the ability to recognise such prospects and subsequently harness them.

Digitalisation is the way of the future, said Ukachukwu, which, when augmented with the development of a vast entrepreneurship class, will reduce poverty Nigeria and Africa. Ranging from considerable reduction in costs, improved turnaround times, elimination of paperwork and administrative or bureaucratic bottlenecks, to the minimisation of manual or back-office involvement, among others, are all deliverables from digitalisation, which will undoubtedly engender improvements in efficiency, and enhance customer experience and service delivery.

A major task is to explore the boundless opportunities digitalisation and technology can avail any business, moreso start-ups and SMEs. Instances abound of small businesses that became quite large riding on the back of technology. Apple, a Fortune 500 company, did not start with tons of dollars; it started in a garage. Electronics hacker, Steve Wozniack and his friend, Steve Jobs, fantasised about creating a personal computer. In 1976, according to Business Pundit, “the two approached a local electronics store to see if they would be interested in buying a personal computer that Wozniack had built. The owner of the store became interested and said he wanted 50 units. Wozniack and Jobs, both penniless at the time, went to a local computer parts supplier and ordered the parts on credit, based on their first purchase order. This was the start of Apple.” Apple today has market capitalisation in excess of $580 billion. Google, Dell, Amazon, and Microsoft are among companies took a similar trajectory.

The Stanbic IBTC Bank and Google collaboration, Ukachukwu noted, fits into the institution’s goal of fostering economic empowerment through strategic interventions that enable individuals and businesses realise their aspirations. The pursuit of this objective underlined the inauguration of the Stanbic IBTC Business Leadership Series, which made its debut in 2014, to build a new cadre of leaders among people and businesses in Nigeria. Similar capacity-building initiatives spanning various sectors of the economy, including MSME, transport and logistics, trade and finance have also been organized by the Stanbic IBTC Group on an ongoing basis to support individuals and businesses.

“We have a strong conviction in the transformative role of digitalisation and technology. This underlines our partnership with Google which will open another window of opportunity to empower people for self-development and business success and ultimately trigger the much-envisaged SME revolution in Nigeria. At Stanbic IBTC Bank, we are mindful of the fact that socio-economic growth and development are anchored on sound education and robust infrastructural base,” he said.

As Africa’s biggest economy, which rebasing few years ago threw up previously underreported sectors such as telecommunications, entertainment, and retail, moving forward requires the development of a critical mass of skilled manpower to drive its future growth, while sustaining its growing international profile and reputation. With 96 percent of Nigerian businesses being SMEs, and approximately 90 percent of them operating in the manufacturing and industrial sectors, the potential to trigger rapid socio-economic transformation remains high.

  • Sumonu is a Lagos-based Economist and Public Analyst