The shift to digital is rapidly becoming the main ingredient for business growth. To keep up with the evolution of technology, corporations are under pressure to include innovation strategies in their models. Now more than ever, traditional businesses are seeing increased value from partnerships with start-ups, who bring fresh, agile and innovative thinking to the boardroom, opening up endless opportunities for small and medium-sized enterprises (SMEs).
As we know, small businesses and entrepreneurs are the biggest contributors to job creation and the acceleration of Africa’s economy. They represent about 90% of businesses and more than 50% of employment worldwide.
SMEs are known for their impact in contributing to inclusion by serving locations, populations and markets that do not have enough scale to attract larger firms, thus creating new demands and markets. However, as the evolution of corporate innovation thrives, SMEs need to also take advantage of the opportunities presented to them.
Fetola supports SMEs across Africa
As a strategy to support SMEs across Africa, in June Fetola partnered and joined a panel discussion at the inaugural Global Start-up Awards Africa Summit – which is active in 55 African countries – where industry leaders and small businesses from across Africa shared their insights on the evolution of corporate innovation.
The impact of the partnership highlighted how the opportunity that trends like “intrapreneurship” and open innovation present to SMEs looking to future-proof their operations, and to start-ups looking to harness potent partnerships for growth and scale.
During the summit, the launch of the 2021 African Blockchain Report revealed that 22% of working-age Africans own their own businesses, making Africa the highest entrepreneurship rate in the world.
Initiatives such as the GSA Africa Summit are model examples that enable corporate innovation, collaboration and partnerships with small businesses. A significant number of corporates set up satellite offices in coworking or other shared office spaces to get acquainted with start-ups in their industries and scope out potential markets and collaborations, however, start-ups also need to play actively position themselves with the relevant skillset to achieve value-shared partnerships.
Speaking about the need to create market access for small businesses, Grant Prince, SME investment readiness manager at Fetola says: “When we think about access to market and collaborating with corporate partners, it is really about the link and how you create value for both the entrepreneur and the corporate.”
“Entrepreneurs also need to have a deeper understanding of their customers and to know how their products or services solve a problem for their customers,” adds Prince.
An example of a corporate that had adopted the concept of corporate innovation is the V&A Waterfront, which has partnered with over 4 000 small businesses.
Head of social impact and food ecosystem at the V&A Waterfront, Henry Mathys, commented: “Creating an inclusive environment starts with an institution understanding what barriers they are creating to access that market opportunity – particularly for small black-owned businesses.”
Meanwhile, challenges around SME funding were also addressed, as SMEs are less likely to be able to obtain bank loans than large firms; instead, they rely on internal funds, or cash from friends and family, to launch and initially run their enterprises.
The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending.
“There is a gap in providing finance to small businesses – either the finance costs are so expensive that they can’t afford it, or the bank doesn’t want to lend to them. Collaboration and partnerships have allowed us to de-risk our pipeline of small businesses and provide them with access to affordable finance,” says Bridgit Evans, director at SAB Foundation.
While corporates are encouraged to collaborate and partner with small businesses, SMEs should also grab the opportunities being offered and make the most of them. Initiatives such as that of the GSA Africa Summit present growth, collaboration, and even financial opportunities for SMEs.
Fetola aligns with this mission through their partnership with GSA Africa and is focused on empowering and mentoring SMEs across the African continent. To this end, by becoming a part of accelerator programmes, summits, and engagement platforms within the ecosystem, SMEs open themselves to a wider range of business opportunities.