Internet connectivity and digital payments are becoming more influential in driving the performance of small and medium enterprises (SMEs) in Uganda, according to industry players.
SMEs account for approximately 90 per cent of the entire private sector, generating over 80 per cent of manufactured output. In total, this contributes 20 per cent to Uganda’s gross domestic product (GDP), according to the Uganda Investment Authority.
A 2020 fourth quarter Market Performance Report by the Uganda Communications Commission recently revealed that mobile money transactions crossed the one billion transactions mark for the first time, surpassing the previous quarterly record of 954 million.
There is now an average of 15 transactions per active mobile money account every month, an indicator that SMEs are clearly benefitting from the boost they get from digital payments. At an online thought-leadership forum hosted by Airtel Uganda, under the theme, ‘E-commerce and digital connectivity opportunities for SMEs, digital payments and their symbiotic relationship with SME’s dominated the conversation.
Allan Semakula, the director, Enterprise at Airtel Uganda, hinted on the effects of the Covid-19 pandemic’s role as a contributor in the recent systemic shift in the rise of preference for digital payments.
“The new normal has opened up the digital space and e-commerce to SMEs, due to lockdown and health standard operating procedures issued by the government, thus facilitating more e-commerce transactions,” he said.
“From an e-commerce perspective, before, we could talk of cheques and physical cash, but now we are evolving to digital payments like Airtel Money which are safer from a health perspective. Time may come where the balance in terms of scale between cash and digital payments might shift to 90 per cent in favour of digital payments,” he added.
In line with these developments, Airtel’s decision to invest in over 2,100 network sites across the country intended to bring the services closer to the customers with the desired internet connectivity is purely informed by commendable mobile money usage and the lucrative e-commerce space for SMEs.
Tony Otoa, the chief executive at Stanbic Business Incubator, emphasized how there has been evolvement in the SME space.
“At the incubator, we operated in a brick-and-mortar way where we had to train individuals in a classroom setting, but now we have to embrace the digital platform,” he said. He added: “Internet then was
for social networking but now it is for everything and for a business we have seen how these channels support in engaging customers, how a business can advertise, sell, or identify which platform can support their growth,” he noted.
John Kakungulu Walugembe, the executive director at the Federation of Small and Medium Enterprises-Uganda, revealed that there is a quick transition of businesses in urban areas during this post-pandemic period, while those in rural areas are still facing a challenge due to digital literacy disparities, an issue that needs to be addressed.
“With digital literacy with simple training on how you use a phone, social media platforms will support in this realization, particularly targeted for micro businesses in rural areas.” He added that collaboration with the policymakers and the different stakeholders in the SME chain is important as this will enable the government to attain its agenda of digital transformation.
According to Walugembe, there is need to provide devices at an affordable cost for accessibility.