Digital tech helps small firms compete in francophone Africa

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Digital technologies deliver real benefits to companies in French-speaking Africa. They improve communication with value chain partners, lower operating costs and boost marketing and sales. But poor-quality, expensive internet connections mean many firms struggle to digitalize.

That’s the main message of a new International Trade Centre (ITC) report exploring ways to make small businesses in francophone Africa more competitive. The fifth annual edition of SME Competitiveness in Francophone Africa: Fostering digital transformation finds that improving digital skills through training, hiring and educational practices and policies is essential.

The report is based on data from 4973 businesses interviewed by ITC and the Permanent Conference of African and Francophone Consular Chambers in francophone Africa between May and August 2022. About 60% of these firms said they used digital technologies to communicate with buyers or suppliers through e-mail, while half did so through social media. Using digital tools to communicate is valuable – especially for marketing and reaching new customers, the report finds.

‘Using digital technologies pays off: four-fifths of companies that used digital technologies saw their costs decrease or their sales increase,’ it says. ‘Companies that used advanced digital technologies were twice as likely to increase production efficiency.’

Where digital tools bring big change for companies

The real efficiency and competitiveness gains come when a company integrates digital tools into its core operations. For instance, 78% of firms that adopted more advanced digital technologies – such as cloud-based data storage, digital accounting or computerized inventory management – said their production efficiency improved, compared to 42% of firms that only used e-mail or social media.

Few companies in francophone Africa use advanced digital technologies, however. The survey found that just a quarter used digital technologies for accounting, recordkeeping and inventory management, for instance.

Providing financial support for investments in advanced technology, as well as technical assistance to help firms use it, can be key for businesses in the region, the report says.

For this to be inclusive, smaller firms also need help to craft digitalization strategies. Training in cloud data, e-inventory management and other tools is essential to prepare employees to use such technologies effectively, the report says. Government investment in such training can help small businesses develop digitally competent workforces and facilitate an inclusive digital transformation.

The ITC paper will be presented today at the Ateliers de la Coopération consulaire et économique in Bordeaux, France.
Distributed by APO Group on behalf of International Trade Centre.