More African SMEs embracing digital payments – Mastercard

African small and medium enterprises (SMEs) are embracing the use of digital payments, according to the second edition of the Mastercard Eastern Europe, Middle East, and Africa (EEMEA) SME Confidence Index.

"Africa has entered a new era of digital evolution where SMEs are key contributors to economic growth. More Africans have been showing acceptance of digital payments as opposed to cash. The latest SME Confidence Index shows a growing appetite for digital payment acceptance by micro, small and medium enterprises," said Mark Elliott, division president for sub-Saharan Africa at Mastercard.

Over 90% of SMEs in Africa identified accepting omnichannel digital payments, digitizing business operations, and training and upskilling staff as the main drivers of growth going forward.

Overall SMEs on the continent are optimistic about 2023 revenue projections, with 80% of SMEs in South Africa, 78% in Nigeria and 68% in Kenya expecting revenues to hold steady or grow compared to 2022.

"As SMEs recover from the [COVID-19] pandemic and return to growth phase, the research shows that 76% of SMEs in Africa project similar or increased revenue in the next 12 months," Mastercard said in a statement about the findings of the report.

Mastercard previously told Connecting Africa it sees major growth potential in Africa's fintech sector and has been strategically partnering with and investing in local fintech companies to further entrench itself into the market.

In August 2023, it announced plans to become a minority investor in telecoms group MTN's fintech business.

SME confidence rises

The 2021 inaugural SME Confidence Index delved into the impact of the pandemic on SMEs across sectors, products and services, and how they are embracing a digital future. As a continuation, the second edition of the survey reveals that while SMEs across the African continent are confident about business growth, digitization remains the biggest opportunity.

In Africa, six out of ten SMEs are confident about business growth in the next 12 months compared to 2022. Leading the region, 66% of SMEs in Kenya are optimistic about 2023, followed by Nigeria at 63% and South Africa at 55%.

The survey highlights the top three areas for support required by SMEs in Africa: training and upskilling staff (91%), digitizing business (88%) and business advisory, education and mentorship support (88%).

Over 60% of small businesses in Africa are confident about growth in the next 12 months compared to 2022, Mastercard found. (Source: Freepik)

According to the World Bank, SMEs account for 60% of jobs in Africa, yet they operate in a cash-based economy, and face a $330 billion financing gap. Access to training, digital tools, credit and resources are key to their survival, Mastercard said.

The SME Confidence Index also indicated other areas of support, including access to training and development (92%), better data and insights (90%) and regulatory support (85%).

Rising costs lead to concern

Around 75% of SMEs surveyed said they were being impacted by the rising cost of goods and services.

As markets navigate an increasingly dynamic economic landscape, other challenges were also highlighted with 63% of SMEs surveyed saying they are concerned about the rising cost of doing business, and 42% unsure about retaining staff.

The survey was conducted through telephone or face-to-face interviews with SME decision-makers in 11 countries across EEMEA. In Africa this included 300 respondents per country in Kenya, Nigeria and South Africa, and around 100 respondents in Egypt.

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*Top image source: pressfoto on Freepik.

— The Staff, Connecting Africa