An Insight into the Consequences of Digitalization and Digital Technologies for Small and Medium Enterprises (SMEs) in Africa

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IMF (2020) estimates that 20 million jobs must be created annually in SSA and Africa at large to accommodate the region's expanding labor force. However, digital technologies like email, the internet, and mobile money have a huge potential to generate wealth and jobs that African businesses still need to realize. Even though mobile phone technology has helped spread Internet-based innovations throughout the region, this process is slowed down by a vast Internet divide; businesses and people use these technologies less than they could. In 2015, Internet penetration rates in African nations were below 60% of the total population, with penetration rates as low as 5% in some nations including Niger, Sierra Leone, and Guinea-Bissau. Again in 2015, small African firms employed almost 80% of the labor force on the continent. But surveys by the World Bank between 2013 and 2018 show that less than 60% of SMEs used email for business, and less than 30% used websites for the same thing. In contrast, 90% of major businesses polled within the same time period acknowledged utilizing email and/or a website for conducting business. Since SMEs are currently the largest employers and wealth creators in the region, the poor dissemination and adoption of digital technology severely limit their ability to advance. More specifically, and unlike previous research-based analyses of the digitalization of African firms, the research article combines quantitative analysis and qualitative data to give readers a bird's-eye view of how digital technologies affect the performance of small and medium-sized enterprises (SMEs) in Africa and the opportunities for private sector growth that come with the ongoing digitalization of the economy.