African firms spend millions on digital tech to navigate the future

By Conrad Onyango, bird story agency

African businesses are increasingly spending millions of dollars on new technologies to create operational models that overcome economic disruptions.

Two separate reports revealed that most businesses on the continent now use technological tools they never used before to test new ideas that would help them navigate dynamic operating environments.

According to the 2021 CIO Africa Megatrends report, 68 per cent of companies surveyed in seven countries – Nigeria, Kenya, South Africa, Egypt, Uganda, Tanzania and Rwanda – digitised whole or part of their core functions, using new technology.

Cloud computing that allows firms to rent remote data storage, business intelligence software that collects and process large amounts of unstructured data and collaboration tools topped the list of most adopted technologies in Africa over the last three years.

“Firms in Africa are clearly investing in new technologies to deal with the disruption,” said the Megatrends report.

Over the next three years, the report points to the adoption of even more advanced technologies that focus on artificial intelligence, customer relationship management and the Internet of things.

Fifty-five per cent of businesses suggested that AI will help to create new business models, while 54 per cent expect this software to enable the creation of new products and services.

Another report by the International Trade Center, dubbed *SME Competitiveness in Francophone Africa 2022 – Fostering digital transformation* mirrors the trends noted in the Megatrends report.

Of the 4,973 respondents surveyed – mainly small and micro enterprises – almost 60% reported using digital technologies to connect with buyers or suppliers.

However, there was limited adoption of more advanced technologies in French-speaking Africa, with just 27% of firms saying they used cloud-based data storage or digitalised inventory management for accounting and record keeping. The high cost of these technologies, and little or low capacity, emerged as the most significant barriers to adoption.

“Such digital deepening requires advances in small business digital maturity, which entails a digitalisation strategy and investments in advanced technology,” according to the report.

Large companies reported a high preference for using personal computers to connect to the internet, while most SMEs with limited financial resources preferred smartphones as less-costly options for fulfilling their digital needs.

Companies in Benin, Burkina Faso, Cameroon, Chad, Congo, Côte d’Ivoire, Gabon, Mali, Morocco, Togo and Tunisia that leveraged advanced technologies reported improved production efficiency (78%), access to new customers (57%) and increased sales (62%).

Nine in every ten firms said they were looking to recruit more employees with digital skills in the next five years – with varied skills requirements.

While small companies would be looking for employees with basic digital skills, such as word processing, e-mail, and use of keyboards and touchscreens, large trading and formal sector firms said they were more interested in employees with skills in big data, artificial intelligence, coding and mobile app development.

“In francophone Africa, firms that assessed the digital skills of their employees during the recruitment process were almost three times more likely to have a highly digitally skilled workforce than those that did not screen for digital skills when they hired,” said researchers at ITC.

The Megatrends report shows firms are investing as little as US$1,000, to over US$1 million to upgrade their core functions using new technologies. Almost half of the organisations surveyed invested up to US$100,000 in the projects, with 9% indicating an investment of up to US$5 million.

Stats

In 2021, 68% of companies in seven countries digitised all or part of their operations.

-Cloud computing, business intelligence software, and collaboration tools are the most adopted technologies.

-Nine in every ten firms will be looking to recruit more employees with digital skills in the next five years.

bird story agency