Technology is rapidly changing our everyday lives, as revealed by many parts of the economy — from agriculture, banking and retail to education and health sectors — introducing digital products, services and systems. Increased digitalisation generates much-needed economic opportunities for SMEs and jobseekers.
The online world has created room for businesses of all kinds, from e-commerce, app stores, technical services, online advertising and cloud computing, to tech product deliveries. It is therefore important that SA actively looks to break down barriers to entry and build solutions that can sustainably connect SMEs to the growing digital economy.
When small businesses thrive the benefits filter through to their families and communities, and ultimately the entire economy benefits. Fortunately, SA has major digital entrepreneurial potential, underpinned by a solid telecommunications infrastructure.
According to the World Bank Group’s Digital Economy for Africa Initiative (DE4A), SA is a “key digital entrepreneurship player in Africa, serving as a ‘hub’ for many initiatives and investments on the continent”. However, the DE4A report warns against complacency considering the intense competition on the continent. Therefore, SA must intensify the support it provides digital SMEs.
This should include lifting barriers to adopting digitalisation such as the acquisition of capital-intensive technologies and building required digital skills, as outlined in the Wits University LINK centre report on the digital economy and society. It is by only by increasing domestic investment in the sector that SA can upscale and take advantage of the market potential as well as its history of tech innovation. This will also boost the country’s attractiveness to international investors, especially global venture capital.
A case in point: the DE4A report shows that increased broadband investment of R65bn within 10 years could create more than 400,000 jobs and add R130bn to SA’s GDP. Research by Accenture estimates that given the country’s rapid digital trajectory, it is expected to contribute about 6% to GDP, similar to where the US is today.
Characterised by their agility and innovation, SMEs have a unique advantage in the digital economy as they possess the flexibility to adapt quickly to changing market dynamics. While SA’s digital opportunities are large — and growing — it is essential to have programmes and support in place that not only provide guidance on running a business, but also assist in establishing and managing one successfully.
According to our observations, funding is a major pain point for business owners. Many SMEs rely on personal funds or assistance from their families, which is not always a sustainable or responsible approach to building a lasting enterprise. Neglecting support for these businesses would be detrimental to the country’s overall wellbeing and progress.
Through various initiatives offered by Telkom over the years it has become clear that for these SMEs to scale up sustainably they need to be supported and nurtured. This way the SMEs can fully leverage the wealth of opportunities offered by technology that could enable them to expand their reach, innovate and compete on a global scale.
Through FutureMakers, our enterprise and supplier development unit, Telkom has been able to address specific societal gaps, ensuring that tech-led SMEs operating in underserved communities have equal access to support and opportunities.
Initially, Telkom invested R250m through the IDF Future Fund, a specialist entrepreneurial financing institution, towards technology entrepreneurs in the sector. The seed capital was increased by a further R58m, enabling Telkom to provide R39m in interest-free loans to SMEs. In 2022 Telkom FutureMakers directly supported 102 enterprises, creating 66,536 job opportunities. Telkom has also set up an SME financing platform called TelkomLend. Since launching in August 2022 about 10,000 merchants, who applied for more than R388m, have been registered on the platform.
We have also converted Yep!, previously called Yellow Pages, into a virtual marketplace at the heart of the digital economy. It’s a place where customers can purchase directly from local SMEs. This platform was introduced at a time when SMEs were hit hard by Covid-19 restrictions and desperately needed a digital solution to stay afloat. It helps consumers find verified and reliable businesses while also helping SMEs gain more exposure, communicate with consumers and go digital in a sustainable manner.
By partnering with youth, women- and black-owned SMEs and providing opportunities they would otherwise be excluded from, we have the unique opportunity to transform our supply chain — ensuring it reflects and represents the local communities we work in. As leaders in the digital economy we play a crucial role in nurturing SME growth and fostering innovation. With incubators, accelerators and mentorship programmes, we are building an ecosystem where knowledge, resources, and expertise are shared, allowing SMEs to thrive and contribute to meaningful change.
As SA strives for sustainable development we must recognise the importance of SMEs, and implement initiatives to nurture their growth so that we can reap their full contribution. We cannot do it alone. It’s up to the government and the private sector to work together to deliberately support SMEs, our engines of growth. With the right support and a resilient entrepreneurial spirit, SA’s SMEs can shape the nation’s digital future and drive socioeconomic transformation.
As one of the key stakeholders in the SA ICT sector we look forward to contributing to the government’s digital economy master plan as part of efforts to advance SA’s digital services and create jobs.
• Jantjies is group head: innovation & transformation, and Mabaso managing executive: home & business solutions, at Telkom.
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