GSMA Report: 'Mobile Money Continues to Positively Impact the Lives and Livelihoods of Millions, but There Is a Need for Greater Digital Financial Literacy'

As I was preparing for a phone call with a gentleman who has an idea of creating a service that will allow people in Africa to transfer funds, I found a report entitled State of the Industry Report on Mobile Money 2025 (SOITR), which finds transaction volumes and values for mobile money accounts experienced robust double-digit growth in 2024. Prepared by the GSMA Mobile Money program, which works to advance the mobile money ecosystem for communities worldwide that lack access to more traditional banking services, the report also points out that approximately 108 billion transactions, totaling over $1.68 trillion, were processed through mobile money accounts in 2024. Year-on-year, transaction volumes increased by 20%, while transaction values grew by 16%, up from a 13% increase in 2023.

The report provides a quantitative assessment of the state of the mobile money industry based on GSMA data from the Mobile Money Deployment Tracker, the 2024 Global Adoption Survey on Mobile Money and Mobile Money Estimates and Forecasts. This supply-side data is further enhanced with nationally representative quantitative primary research from the 2024 GSMA Consumer Survey of seven low- and middle-income countries (LMICs).

The report's key findings include:

• In 2024, the mobile money industry achieved two major milestones: these were over two billion registered accounts and more than half a billion monthly active accounts;
• Mobile money continues to contribute to the gross domestic product (GDP) in countries with a service;
• Growth in Sub-Saharan Africa has contributed to the increased reach of mobile money agent networks worldwide;
• Mobile money offers a viable business case to parent companies, with average revenue per user having grown from $2.86 in 2023 to $3.51 in 2024;
• In 2023, the value of both bill payments and bulk transfers dropped for the first time; in 2024, both use cases saw a significant rebound;
• Several interoperable mobile money use cases saw continued growth in transaction values in 2024;
• The number of mobile money providers offering adjacent services has grown again;
• When comparing different regions, mobile money in East Asia and the Pacific has seen progress over the past few years;
• Many mobile money providers (MMPs) are benefitting from a more enabling regulatory environment in several areas;
• Across 12 countries surveyed (Bangladesh, Egypt, Ethiopia, India, Indonesia, Kenya, Nigeria, Pakistan, the Philippines, Senegal, Tanzania and Uganda), a gender gap in mobile money account ownership exists in eight countries (Bangladesh, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines, and Senegal); and
• Mobile money continues to positively impact the lives and livelihoods of millions, but there is a need for greater digital financial literacy.

Regarding how mobile money providers are improving customer behavior, the report notes that "MMPs are taking steps to overcome these challenges. Many are investing in artificial intelligence (AI)-driven credit-scoring algorithms to improve their understanding of borrower behavior and tailor repayment options to prevent defaults. In India, Airtel Payments Bank has launched an AI-powered credit scoring system to assess creditworthiness, providing users with personalized financial solutions." What is more, "Such initiatives can gradually improve financial solutions to foster greater inclusion. For instance, AI can be used to generate data on a customer's ability to repay a loan."

With respect to the need for greater digital financial literacy to maximize mobile money's positive impact on the lives of millions of people, the report explains that "[w]hile mobile money serves as an entry point to other services, low digital financial literacy is often a barrier. As a result, around 60% of survey respondents have launched a digital financial literacy policy to increase digital skills and therefore mobile money use over time."

Lastly, on the topic of comparing different emerging and developing markets, the report importantly notes: "In 2024, East Asia and the Pacific had the second fastest growth rate for active monthly accounts behind the Middle East. It is one of the few regions where active 30-day accounts grew faster than registered accounts. Enabling regulation in markets such as Cambodia, Fiji, the Philippines and Vietnam has supported the growth of digital payments."

During my conversation with the young gentleman originally from West Africa who is seeking to develop a money transfer platform for his home market, I referenced the following text provided in the report's Forward authored by GSMA's Director General, Vivek Badrinath: "Today, Sub-Saharan Africa remains the epicenter of mobile money, accounting for over 1.1 billion registered accounts. However, East Asia and the Pacific and the Middle East and North Africa will be interesting regions to watch moving forward. Last year, both regions saw considerable growth in the number of mobile money accounts, active users and transaction volumes."

Mr. Badrinath encouragingly adds that "[a]s mobile money continues to drive financial inclusion, it is also unlocking new opportunities for people to save, earn, and spend – solidifying its place as a true fintech success story."

What do you think of the report's findings?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

5G Expected to Contribute $10 Billion to Africa's Economy by 2030

"Mobile connectivity is a key driver of digital transformation and socioeconomic growth in Sub-Saharan Africa," according to GSMA's annual report on the state of the Sub-Saharan Africa's mobile economy. The report points out that "Governments and businesses are increasingly using 4G and 5G networks alongside technologies such as AI and IoT to enhance productivity and service delivery. Despite growing demand for mobile, a significant usage gap persists. This underscores the need for efforts by operators to address the barriers to mobile internet adoption, such as device affordability, online safety and digital skills."

The report's key findings include:

• Persistent Usage Gap: Mobile internet penetration in Sub-Saharan Africa reached 27 percent by the end of 2023, yet a substantial usage gap of 60 percent remains. This gap represents millions who live within network coverage but face barriers such as device affordability, digital skills deficits, and concerns around online security. Globally, 3.1 billion people – 39 percent of the global population – are impacted by the usage gap. Sub-Saharan Africa is the least connected region, with the largest usage gap worldwide.
• Expanding 4G Coverage and Early 5G Growth: The region's 4G adoption is forecast to reach 50 percent by 2030, overtaking 3G as the primary technology. Although 5G adoption remains in its early stages, it is projected to reach 17 percent of total connections by 2030, primarily in South Africa, Nigeria, and Kenya.
• Economic Impact and Infrastructure Needs for 5G: By 2030, 5G alone is expected to contribute $10 billion to the region's economy, accounting for 6 percent of the mobile sector's total economic impact. GSMA's report emphasizes the need for progressive spectrum policies, particularly the release of mid-band spectrum, to support long-term growth and equitable digital access. Additionally, 5G Fixed Wireless Access (FWA) is gaining traction as a primary broadband solution in countries such as Angola, South Africa, Nigeria, Kenya, Zambia, and Zimbabwe, addressing demand for high-speed connectivity in underserved areas.
• Strengthening Digital Security: South Africa became the first country in Sub-Saharan Africa to implement GSMA Open Gateway APIs, focusing on fraud prevention and security with Number Verification and SIM Swap APIs. This initiative is part of broader efforts across the region to improve digital security, particularly within digital banking​.
• Generative AI Potential: Generative AI is expected to contribute up to $1.5 trillion to Africa's economy by 2030, with mobile operators increasingly using AI for customer engagement and network optimization. MTN and Vodacom, for instance, are deploying AI-powered initiatives to enhance operational efficiency, although the region faces a shortage of skilled AI professionals.

Through this report, the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, advocates for a series of critical actions to ensure sustainable growth and digital inclusion:

1. Affordability Reforms: High costs remain a barrier to mobile access, with the report calling for reduced taxes on the sector, such as lowering import duties on handsets and cutting activation fees, to make services affordable and accessible for all.
2. Revitalized Universal Service Funds (USFs): Many USFs in Sub-Saharan Africa are underperforming, often hindered by inefficiencies. The report calls for reforms to improve transparency, streamline disbursements, and direct funds toward impactful initiatives, such as digital literacy programs in underserved areas.
3. Progressive Spectrum Policy: With increasing data demands, the report urges governments to release additional spectrum, particularly in the 6 GHz band, and to adopt policies that ensure efficient, affordable, and environmentally sustainable mobile network expansion.

Infographic: GSMA Intelligence

With respect the mobile technology's contributions to the UN Sustainable Development Goals (SDGs), the report says the industry "contributes to SDG 4, which seeks to ensure inclusive and equitable quality education, and promote lifelong learning opportunities for all. Digital transformation is making learning resources more accessible, enhancing educational outcomes and supporting continuous learning. By bridging gaps in education access and improving the quality of education, mobile technology is fostering a more inclusive society."

What investment or commercial opportunities are you seeing in Sub-Sahara's mobile technology industry? What are your recommendations for closing the digital divide?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

The Role of Mobile Technology in Driving Digital Transformation of Ethiopia's Economy

"Digitalization of the economy is a key driver of economic growth and government revenue" in Ethiopia, according to a report published by GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. The report adds that digitalization "also supports socio-economic development and offers a path towards shared prosperity. By leveraging digitalization opportunities, the Government of Ethiopia can achieve sustainable economic growth and structural changes."

The report's additional key messages include:

• "Adoption of digital technologies across both public and private sectors can impact on economic growth. It can increase agricultural productivity, improve access to global value chains (GVCs) and increase efficiency of government and public services. Access to emerging technologies such as artificial intelligence (AI) and cloud computing are desirable as drivers of digital and financial inclusion which in turn supports human development."
• "Digitalization, including the telecommunications sector reform program and the introduction of mobile money, is a key part of the Ethiopian government's Homegrown Economic Reform Agenda (HGER) since 2019 and implemented under the 2021-2030 Development Plan, the Digital Ethiopia 2025 strategy, the Communications Service Proclamation No. 1148/2019 and the National Bank of Ethiopia's (NBE) strategic plans.

As explained by the report's authors, "In the five years since the launch of Digital Ethiopia 2025 and the start of the telecommunications reforms, the number of people covered by 3G networks has increased by 50%, while coverage of 4G networks has increased by 8 times. This study identifies further opportunities and quantifies the economic value of adopting digital technologies across Ethiopia's economy. It determines how these opportunities can be unlocked through policy reforms, particularly focusing on the key role that the mobile telecommunications sector and mobile money services plays in supporting the process of digitalization."

Regarding policy recommendations, I concur that "Policy reforms must balance short-term objectives with long-term investment and development to realize the full potential of digital transformation in Ethiopia. Reaping the wide-ranging benefits of digitalization will require bold actions to support demand, reduce the cost of supply and promote a policy environment that supports investment."

What is more, "The economic and social value of digital and emerging technologies relies on mobile networks as the backbone of digitalization of the economy and the mobile sector is best positioned to partner with the government to develop a mission-oriented public policy that can catalyze innovation across multiple sectors in the economy."

The report concludes with the identification of  five areas of policy recommendations that the government, the Ethiopian Communications Authority, NBE, and other relevant authorities could undertake to support the development of the mobile telecommunications sector, mobile money services, and the wider process of digital transformation in Ethiopia:

1. Telecommunications reform implementation: Fair and timely implementation of the telecom reforms agenda to enable Digital Ethiopia transformation and inclusion objectives.
2. Industry sustainability and investment: Support industry sustainability and development through investment and tax incentives, including reduce or remove customs duty and other costs on mobile devices to improve affordability and reduce the usage gap.
3. Licensing, spectrum, and regulatory fees: Ensure affordable and predictable licensing, spectrum, and regulatory fees to encourage investment and densification of existing networks, rollout of new generation networks and improve affordability of services.
4. Mobile money and payments: Discourage distortive taxation on emerging mobile money services, and continue implementing regulatory reforms to enable digital financial strategy and inclusion objectives.
5. Demand-side policies: Support demand by continuing implementing digital government and digital ID programs, and incentivizing adoption of digital technologies by consumers and firms.

What are your recommendations for how mobile technology can drive the digital transformation of Ethiopia's economy?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Driving Kenya's Economic Growth Through Digitalization

In a press release announcing the publication of a report focusing on the drivers behind the digital transformation of Kenya's economy, the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, said: "Kenya's digital economy will contribute KSH 662 billion to GDP by 2028. This growth, driven by strategic policy reforms, will accelerate digitalization in critical sectors such as agriculture, manufacturing, transport, and trade. In addition to these advancements, the report forecasts the creation of 300,000 new jobs and an increase in tax revenues by KSH 150 billion."

What is more, "To sustain its economic momentum, diversify the economy, boost productivity, and create high-quality jobs – particularly for young and rural populations – Kenya is focusing on digitalization as a key driver of economic growth, government revenue, and socio-economic development."

Below are the report's key messages:

• "The digitalization of the economy is a key driver of economic growth and government revenue, as well as supporting socio-economic development and offering a path towards shared prosperity. By leveraging digitalization opportunities, the Government of Kenya can achieve sustainable economic growth and structural change."
• "Adoption of digital technologies across both public and private sectors has been observed to positively impact economic growth. It increases productivity in agriculture, improves access to global value chains (GVCs) and improves the efficiency and transparency of government and public services. Moreover, access to emerging technologies such as mobile money, Artificial Intelligence (AI) and cloud computing are desirable as drivers of digital and financial inclusion which in turn supports human development."
• "This study identifies opportunities and quantifies the economic value of adopting digital technologies across selected sectors of Kenya's economy. It identifies how these opportunities can be unlocked through policy reforms, particularly focusing on the key role that the mobile telecoms sector plays in supporting the process of digitalization."
• "Kenya is a regional leader in mobile connectivity and Mobile Financial Services (MFS). It pioneered the use of mobile money, making huge strides in financial inclusion of the unbanked, and has retained its position as a global leader in this area. Further extending its reach as the enabler of electronic payments across the digital economy, as well as traditional sectors, can propel digitalization and growth for many more Kenyans and achieve increased resilience and revenue for the Government."

The report also "identifies a series of policy recommendations that, if implemented, will close the internet usage gap from the current level of over 64% of the population to 51% in 2028. This would result in 49% of the population of Kenya being connected to the Internet, equivalent to over 10 million additional people." The four priority policy reforms are:

1. Tax restructuring in the telecommunication industry to purposefully drive usage.

2. Implementing policies and programs to improve device affordability.

3. Ensuring a sustainable and predictable investment environment. This includes:

• Supporting financial sustainability through tax deductions against spectrum payments,
• Reducing the cost of energy to power infrastructure,
• Adopting a favorable spectrum pricing model, and
• Accelerating the license renewal process.

4. Supporting productive use of digital technologies by businesses across economic sectors, with targeted policies to improve digital skills and human capital, support MSMEs and start-ups and prioritize context-appropriate technologies and local needs.

The report's authors importantly point out that "These policy reforms have the potential to make a significant contribution to Kenya's economic objectives, including economic transformation across important sectors such as agriculture and manufacturing." The potential macroeconomic impacts are summarized in the image below:

Kenya has firmly positioned itself as a leader in mobile financial services and digital innovation. Following the development of information and communications technology sector in Sub-Saharan Africa for over 30 years, I appreciate how GSMA's study outlines the economic benefits of expanding digital adoption and provides a roadmap for maximizing these gains through targeted policy actions.

What are your recommendations for how Kenya can drive economic growth through digitalization?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Toolkit Designed to Help Deliver Digital Skills Training for Impact in Sierra Leone

In my experience working in emerging and developing countries, many people mistakenly assume that if an individual is connected to the mobile internet, then they are able to utilize various life-enhancing applications. However, there is a stark difference between having access to the applications and the knowledge to make full use of these digital tools.

According to a report published by GSMA, "Mobile networks are the primary – and often only – channel for people to connect to the internet, especially in low-and-middle income countries (LMICs)." What is more, "Despite the rapid growth in mobile internet adoption in recent years, there remains a significant usage gap in LMICs: 48% of the population across LMICs still do not use the mobile internet. Of this group, 42% live within the footprint of a mobile broadband network but are not using the internet – this is known as the 'usage gap.' In Sierra Leone, the usage gap is significantly higher at 77%. Among people in this group, a lack of digital skills is one of the most significant barriers preventing them from adopting the mobile internet."

To address the digital skills barrier, the UK-based organization, which aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, says it "developed the Mobile Internet Skills Training Toolkit (MISTT), a free-to-use set of resources covering the fundamentals of the mobile internet, popular apps and use cases." The report also points out that "In order to gather evidence on the efficacy of the MISTT and identify potential areas for further improvements, the GSMA evaluated a digital skills training campaign conducted by Orange Sierra Leone, using MISTT. Specifically, the evaluation aimed to understand how effectively the MISTT delivers improved digital skills, what the socioeconomic impact is on trainees, and what improvements are needed to better reach the underserved."

Below are the report's key findings:

• "MISTT improved digital skills for the majority of trainees interviewed in Sierra Leone, by reducing the functional barriers to mobile internet use, boosting learners' self-confidence and sense of independence and increasing the frequency of internet use by the trainees."
• "There are indications that MISTT has had a positive socio-economic impact in Sierra Leone. This was visible in two main ways: enhancing trainees' potential to conduct business online has improved their prospects and income; and trainees have acquired greater knowledge and education across diverse topics."
• "The impact of MISTT training on business was most observable for women, as they experienced the greatest changes to their digital skills confidence levels, as well as day-to-day life benefits, including being able to do business online while at home. Women were also more likely to enjoy the spill-over effects of the training, as their spouses passed on what they had learned."
• "Incentives are a critical part of digital skills training – both for potential customers and trainers. The effectiveness of digital skills training can be greatly enhanced by providing appropriate incentives to potential trainees and their trainers. For trainers, this might involve providing financial incentives for the delivery of training that drives digital inclusion. For customers, this involves emphasizing how the mobile internet can be valuable to their lives and making them aware of any incentives, such as free mobile data and lunch, that are available to reward participation at in-person training events."
• "Face-to-face training provides numerous advantages for the underserved. Face-to-face or in-person training allows a more tailored learning experience with opportunities for practical application by learners. For example, in-person training enabled trainers to spend time answering trainees' questions and providing tailored support on some of the challenges that they encounter. This is most important for learners with lower literacy and education levels, as well as those in rural areas. However, while effective, in-person training may be more costly for implementers and more difficult to scale."
• "Digital skills training needs to consider the specific barriers that underserved users face. Issues, such as lower levels of education and a lack of basic digital skills and confidence, can impact on people's ability to access and participate in training activities. The evaluation also highlights the importance of adopting a gender lens to the delivery and expansion of digital skills training to ensure it is reaching women. There is a need to consider who might be excluded or disadvantaged from the proposed delivery approach, as well as ensuring the location, timing and content of the training, for instance, will meet their needs."
• "To enhance the scalability and viability of MISTT digital skills training, implementers can explore other approaches to delivering digital skills beyond in-person channels to understand their effectiveness. Remote channels, for example videos, voice messaging and radio broadcasts, may provide an effective way for delivering digital skills training and/or improving training awareness in a cost-effective manner. Both in-person and remote channels have relative advantages and disadvantages. While in-person channels may be more effective at reaching certain population segments, remote channels provide unique benefits to implementers as they are easier to scale and can be iterated or updated more easily than face-to-face channels. Depending on the training objectives, both digital and in-person channels can be used simultaneously to complement the other."
• "Combining digital skills training with other events or product pitches can extend the reach of digital skills training for the underserved and offer benefits to implementers. Delivering digital skills training alongside other activities, such as entertainment events or with the sale of a product or service, can encourage wider participation by reaching people who may be reluctant to attend a formal training event, for example, or linking it to something that is seen as relevant to them. Nonetheless, it's important to bear in mind the needs of underserved groups while designing these activities. For example, for women, the idea of 'standing in the street watching entertainment' may not feel culturally appropriate, as many are worried about theft or appearing to be lazy people who have nothing important to do."

I appreciate how GSMA's report "highlights the key learnings from the evaluation of the MISTT digital skills training initiative implemented by Orange Sierra Leone. It provides key insights on the effectiveness of MISTT in improving digital skills acquisition among different underserved groups, as well as the socio-economic impact of the training." There is also value in how the report "identifies considerations for improving the effectiveness of digital skills training in reaching underserved groups." Importantly, however, the GSMA notes that "the insights and recommendations in this report do not represent our comprehensive view of how to implement MISTT. Rather, they are recommendations specifically arising from this evaluation, and can be a basis for further research and trial. This complements our existing research on digital skills and evaluation of MISTT implementations."

What are your recommendations on how to promote digital literacy and reduce the digital usage gap in LMICs?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

A Roadmap to Ensure That Every Citizen in Zambia Benefits From the Digital Revolution

My colleague, Aze Malawo, who leads the operations in Sub-Saharan Africa for Global Tactics, an multinational advisory firm that helps clients understand how the world is changing, and how that creates opportunities to be seized and risks to be managed, splits her time between Washington, DC and her native Zambia. Since my first meeting Aze in the mid-2000s, I have heard about the beauty of the southern African nation and the business opportunities that exist in several sectors including the information and communications technology sector.

It was, therefore, with great interest to read a report published by the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, highlights how "the digitalization of the economy is a key driver of social and economic growth in Zambia." According to the report, "By taking advantage of the opportunities offered by digitalization, the Government of Zambia can deliver on the development objectives that it has defined and achieve sustainable economic growth."

The report's key findings include:

• Adoption of digital technologies across both public and private sectors accelerates economic growth by promoting innovation and investment. It increases productivity across all sectors of the economy, improves access to global value chains (GVCs) and improves the efficiency and transparency of government and public services. Moreover, access to emerging technologies such as mobile money, artificial intelligence (AI) and cloud computing are desirable as drivers of digital and financial inclusion which in turn supports human development.
• This study identifies opportunities and quantifies the economic value of adopting digital technologies across selected sectors of Zambia's economy. Accelerated development of the digital economy would benefit both the Government of Zambia and the country's citizens in multiple ways. Economic growth would raise incomes, create jobs and raise tax revenues. Digital technologies would also provide direct benefits through enhanced access to information, productivity-enhancing technologies and improved educational outcomes.
• Mobile connectivity and mobile money both play a key role in digitalization. Mobile broadband connectivity provides the foundation for the digitalization process. Mobile money is also critically important, providing individuals and businesses an accessible and efficient route to financial inclusion.
• The mobile telecoms sector in Zambia has made steady progress in recent years but there remain significant challenges. These challenges include expanding access and increasing adoption of digital services, particularly among low-income households and in rural areas. This will require further network rollout and upgrades, support to ensure that devices and services are affordable for everyone and boosting adoption through stimulating demand for digital services.

The report importantly points out that "[p]olicy plays a critical role in the future development of the digital economy in Zambia. The growth and development of the digital economy is strongly influenced by policy and regulatory decisions taken by the government." The GSMA says its "study identifies how opportunities for economic growth and development can be unlocked through policy reforms. Overcoming the challenges facing the sector will require bold policy initiatives on the part of government to stimulate demand, reduce the cost of supply and promote investment in mobile telecoms networks and in mobile money services."

GSMA's report also "identifies a series of specific policy recommendations that, if implemented, would increase the number of internet users in Zambia by 2.1 million by 2028. This would reduce the internet usage gap by 9 percent points."

The priority policy reforms include:

• Reducing sector-specific taxes and fees on mobile telecoms services
• Reducing operating costs and improving the financial sustainability of the mobile business
• Modernizing the tariff regulation regime, to provide more certainty for operators
• Lifting restrictions on mobile money charges and removing the mobile money levy
• Stimulating additional demand for mobile telecoms services

If adopted, these policy reforms "will help Zambia to achieve its economic development objectives, including economic transformation across important sectors such as agriculture and manufacturing. The potential macroeconomic impacts are summarized below in Figure 1."

Image: GSMA

In a press release issued by the GSMA, Angela Wamola, Head of Sub-Saharan Africa for the UK-based organization, said: "The Zambian government has demonstrated strong commitment to digitalization through its National ICT Policy 2023 and the Eighth National Development Plan. Now, more than ever, collaborative action between the government, industry, and stakeholders is needed to create the enabling environment for digital transformation. The future of Zambia lies in digital connectivity. With the right policies, we can close the digital divide, empower communities, and unlock new economic opportunities. The Zambia Digital Economy Report provides a clear roadmap to ensure that every citizen benefits from the digital revolution. Now is the time for bold action."

What are your thoughts about the report's findings? What digital transformation opportunities are you seeing in Zambia's mobile technology sector.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Exploring Use Cases on How AI Delivers Impact in Africa

"AI holds immense potential to boost Africa's economy and to support the Sustainable Development Goals (SDGs) on the continent, says a report published by the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. With funding from the UK Foreign, Commonwealth and Development Office, the report's authors explain that "While AI is already being developed and deployed to support a range of use cases across African countries, little research has focused on building a body of evidence of AI use cases for development on the continent." They further explain that their "report is based on the analysis of over 90 use case applications identified in Kenya, Nigeria, and South Africa – which benefit from thriving tech ecosystems – across agriculture and food security, energy, and climate. While many AI use cases are relatively nascent, with some being deployed as part of projects or pilot schemes, a number of commercially viable solutions have also emerged. Often, AI is being incorporated into existing digital products and services, acting as an enabler to make digital solutions more relevant and efficient, amplify their impact, and facilitate scaling."

The report importantly points out that "The agritech sector is seeing most of the AI innovation, especially in Kenya and Nigeria where agriculture continues to play a significant role in the economy. AI is already being used for agricultural advisory, with companies like TomorrowNow and ThriveAgric providing farm-level insights to farmers, and for financial services with companies like Apollo Agriculture developing alternative credit assessment methods."

AI is also "being deployed in the energy sector, especially in Nigeria, where emerging technologies like Internet of Things (IoT) act as an entry point for advanced data analytics in smart energy management. Use cases such as energy access monitoring and productive use asset financing, developed by companies like Nithio, remain at a developing or nascent stage but present significant potential to reduce energy poverty. AI is also supporting climate use cases especially for biodiversity monitoring and wildlife protection in Kenya and South Africa, driven by large tech companies like Microsoft's AI for Good Lab and nonprofit organizations such as Rainforest Connection."

Regarding high-level recommendations, the report says different stakeholders – governments, development partners, development finance institutions (DFIs), non-governmental organizations (NGOs) and Civil Society Organizations (CSOs), large tech companies and startups, and research and academic institutions – "can take a number of actions and collaborate to ensure that impactful innovations in Africa can be deployed and scaled. This involves investing in domain-specific and local language data, adopting participatory approaches to data collection, unlocking access to existing data sources, and ensuring data privacy and security."

The report adds that "Strengthening baseline infrastructure and promoting renewable energy, providing hardware and cloud credits, enhancing edge computing capabilities and building institutional capacity will be essential to boost local compute capacity. In addition, fostering academic-industry collaboration, raising awareness and building capacity in the public sector will be essential to create a pipeline of AI talent while ensuring informed policymaking. To foster adoption and usage of AI-enabled services, enhancing digital skills among end users and integrating emerging skills like prompt-engineering into upskilling programs will be key, especially as generative AI solutions gradually grow in Africa."

Moreover, "Stakeholders across sectors can also focus on supporting the wider tech and AI ecosystem to foster an environment conducive to innovation and AI deployment across use cases. This involves engaging in partnerships to unlock access to critical resources for AI entrepreneurs and researchers, and to support the development of the AI ecosystem through data-sharing or infrastructure-sharing initiatives."

I concur with the authors that:

Adopting a consortium-based approach has the potential to help address the financing gap, while adopting innovative finance mechanisms can de-risk investments. Combining funding with technical assistance and go-to-market support can also help founders in their scaling journey. Increased R&D spending will be essential to support local research capacity, while local-global knowledge exchange can drive further momentum and raise awareness about local innovation. As countries work on developing national AI strategies, it will be critical to ensure a collaborative and inclusive process, to include principles for the ethical and safe use of AI, and to establish a clear roadmap for implementation. Policymakers can also consider rolling out regulations in a phased manner to allow innovation to flourish.

Do you agree with the recommendations on how different stakeholders can deploy and scale impactful AI innovations in Africa?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Silicon Valley at the Top of the Global Startup Ecosystem in 2023

The 2024 Global Startup Ecosystem Report (GSER) by Startup Genome and the Global Entrepreneurship Network was released at London Tech Week, in collaboration with the Founders Forum, Informa Tech and London & Partners. Presented by Stephan Kuester, Managing Partner at Startup Genome, the GSER analyzes data from over 4.5 million companies across 300+ entrepreneurial innovation ecosystems and features rankings that indicate which ecosystems are currently driving innovation and deep knowledge about startup trends around the world.

Global key findings from the the 2024 GSER include:

• Top three global ecosystems: Silicon Valley remains at the top, followed by New York City and London tied for #2.
• The number of new unicorns in 2023 was down 58% from 2022 and 87% from the 2021 peak. With 15 unicorns, Silicon Valley again led all ecosystems for the most new unicorns in 2023, though this was down 80% from 2022. The Tashkent, Lyon, and Rhineland startup ecosystems welcomed their first unicorns in 2023.
• Series A funding amount in 2023 was down 46% from 2022, and the value of large exits ($50M+) fell 47% over the same period.
• In 2023, the Series A funding amount share for Top 40 ranked GSER 2024 ecosystems was 65%, down from 79% for these ecosystems in 2019. The share of Series A funding amount for the Top 100 Emerging Ecosystems reached 19% in 2023 vs. 13% in 2019.
• Q1 2024 has projected higher Series A funding amount and deal count than Q4 2023.
• Generative AI saw a surge in funding, with nearly 20% of all VC funding in 2023 going to GenAI-focused startups. GenAI VC funding increased 3x in 2023 compared to 2022. Deal counts nearly doubled.
• In 2023, more than half of new unicorns were in the GenAI and Deep Tech sub-sectors, a higher rate than in 2021.
• Late-stage Cleantech startups raised 2.5x more funding in H2 2023 than in H1 2020. Europe has outperformed the U.S. and China in terms of Cleantech Series A funding growth from 2021 to 2023.
• Seoul moved up three spots, now ranked #9, entering the Top 10 ecosystems this year.
• Tokyo has entered the global Top 10 for the first time, marking the most significant improvement among the Top 10 ecosystems.
• The top two Chinese ecosystems Beijing and Shanghai, have dropped in the overall rankings to #8 and #11. Shenzhen has shown impressive growth, moving up seven spots to rank #28.
• Europe is the most represented region in the Emerging Ecosystems Ranking, with a 42% share in the Top 100 Emerging Ecosystems, followed by North America with 27%.
• Madrid moved up 12 ranks, claiming to #1 in the Emerging Ecosystems Ranking.
• Barcelona moved up two positions in the Emerging Ecosystems Ranking, reaching #2.
• Athens has entered the Top 100 Emerging Ecosystems Ranking, reaching the 51-60 range in 2024.
  
• Greater Lausanne Region moved up 16 positions, reaching #11 in the Emerging Ecosystems Ranking.
• Jakarta (#6) and Metro Rhein-Ruhr (#9) both entered the Top 10 Emerging Ecosystems Ranking.
• Melbourne is ranking as the #32 Global Startup Ecosystem, moving up one spot from GSER 2023.
• Mexico City has shown impressive growth, reaching the 21-30 range in the Emerging Ecosystems Ranking from the 41-50 range in 2023.
• The top five ranking sub-Saharan African Ecosystems are Nairobi, Lagos, Cape Town, Johannesburg, Accra.
• Tel Aviv is the only MENA ecosystem ranking in the Top 40, globally moving up one place to #4 (tied with Los Angeles).

Now in its 12th year, the GSER provides insights into the world's leading startup ecosystems, emerging trends, and key challenges facing entrepreneurs. As explained in Startup Genome's press release, "The 2024 edition ranks the top 40 global ecosystems, a ranking of emerging ecosystems, and expanded regional rankings. The report, driven by a consortium of representatives from 40+ countries, looks at the current state of startup activity and related investment. It also highlights startup communities from a regional perspective, separately ranking ecosystems in Asia, Europe, Latin America, MENA, North America, Oceania, and sub-Saharan Africa. Contributions from thought leaders further enrich the report's extensive, evidence-based findings, which are the product of over a decade of Startup Genome's independent research and policy work."

I appreciate how the GSER is designed to provide valuable perspective on the global startup landscape and actionable recommendations for entrepreneurs, investors, policymakers, and other stakeholders looking to drive innovation and economic growth even in these challenging times.

What are your thoughts about GSER's key findings?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Presents Crucial Role Mobile Tech Sector Has in Driving Nigeria's Digital Economy

A report produced by GSMA and Through Line Advisors, a UK consultancy, addresses the challenges hindering the growth and development of the telecommunications industry and the crucial role of the mobile sector in Nigeria's economic development. The report begins by pointing out that digitalization is one of the Nigerian Government’s key strategies to achieve the country's socio-economic objectives. "The Federal Ministry of Communications, Innovation & Digital Economy (FMCIDE) Strategic Plan 2023–2027 articulates a clear ambition for digitalization and provides a comprehensive program and set of targets," the report explains. "This recognizes the role that digitalization can have in economic growth, job creation and increased tax revenues across the economy."

The report adds that "The adoption of digital technologies by individuals and businesses has been shown to enhance productivity and raise household incomes." Encouragingly, "Consumers in Nigeria would benefit from increasing adoption and use of digital technologies. The faster the rate of digital adoption in Nigeria, the more quickly and extensively the country will benefit from these effects."

The telecoms sector is a major contributor to the economy of Nigeria and provides the foundations for the digital transformation process. "The mobile telecoms sector accounted for 13.5% of total GDP in 2023, including the direct value-added by wider ICT industries and the impact of the sector in enhancing the productivity of other sectors," according to the report. "Overall, the mobile sector's total contribution to GDP is estimated at 33 trillion NGN in 2023, with 2.4 trillion NGN in tax revenue contributions."

The report importantly notes that "a successful digital economy would have a material impact on the economy of Nigeria over the next 3-5 years. It is estimated that growth in digitalization in agriculture, manufacturing, transport, trade and government will result in an increase in GDP of around 2 percentage points by 2028. This would also create nearly 2 million jobs and raise an additional NGN 1.6 trillion in tax revenue."

The mobile sector, however, faces some major challenges across multiple areas of its business. "The financial performance of the mobile industry in Nigeria has slowed down in recent years after a long period of sustained growth." The report says the industry faces a number of significant challenges:

• The overall financial performance of the industry in recent years has not been sufficient to support the capital-intensive nature of the business.
• Revenue in Naira has stopped growing as the number of subscribers has increased. Falls in ARPUs indicate pressure on prices and reductions in average usage.
• Operating costs have increased significantly in the recent period. The primary driver of this has been increases in the cost of power for sites due to the rapid increases in the price of fuel, high and increasing costs of tax compliance because of the complex and overlapping tax structure within the country, and increased demand for forex due to contractual obligations for rollout that are denominated in USD.
• The cost of building and operating fiber-optic networks has increased because of the difficulty and expense of obtaining Rights of Way (RoW) from state authorities and the very high number of fiber cuts, primarily caused by construction work and vandalism.
• Underlying these trends in revenue and operating costs has been the deteriorating macroeconomic situation in Nigeria. The high levels of inflation have pushed up the cost of many inputs into the mobile service providers' businesses.

The authors suggest that "Mobile service providers need to generate sufficient revenue to cover their operating costs and support this level of capex over the medium-term. If this is not realized, they are likely to cut back on either capital or operating expenditure or both. This results in a shrinking sector which leads to subscribers receiving a poorer quality of service and delays in coverage expansion."

Moreover, "In the short term, it would result in a reduction in the amount of tax revenue generated by the sector. In the medium term, a slow-down in digital adoption will forfeit all of the productivity gains and service delivery improvements that go with digitization."

West Africa nation's mobile "sector would further benefit from a policy and regulatory environment that takes account of the impact on the financial and operational sustainability of service providers," the report notes. The authors note that "Decisions on issues such as tax, regulatory fees, spectrum fees, customs duties and other government levies all have an impact on this. In particular, the current approach of the regulation of both wholesale and retail mobile tariffs by the Nigerian Communications Commission (NCC) does not allow for the adjustment of tariffs to reflect the changing cost of inputs into the businesses and facilitate investment into improved network coverage and quality of service. By international standards, the NCC's approach to retail tariff regulation is not considered to be standard practice."

The authors add:

In addition to the financial sustainability of the industry, further progress on the national strategy for digitalization could be made through a partnership between the sector and the Government. The sector can contribute in specific ways to the Government's strategic initiatives. The Government, the NCC, and all federal and state ministries and regulatory authorities can, in turn, support the sector to deliver on these initiatives. This can be done by improving the sector's regulatory environment and its investment climate. Together, this will further support the Government’s digital economy objectives.

What are you recommendations for how the mobile tech sector can drive Nigeria's digital economy?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Representatives From Nigeria's and Ghana's Financial Sector Learn About U.S. Cybersecurity Solutions

Sponsored by the U.S. Trade and Development Agency (USTDA), which helps companies create U.S. jobs through the export of U.S. goods and services for priority infrastructure projects in emerging economies, I attended the "Nigeria and Ghana Financial Sector Cybersecurity Solutions Networking Lunch" in San Francisco, Calif. on February 13th, 2024. This event, which was part of USTDA's Nigeria and Ghana Financial Sector Cybersecurity RTM (reverse trade mission), provided an opportunity for U.S. companies to hear firsthand from the delegation of Nigerian and Ghanaian business leaders about upcoming business opportunities and to meet one-on-one with delegates to present their cybersecurity services and solutions.

The delegation was interested in procuring products, technologies, and services from American businesses in the following areas: cyber resilience and risk management systems, electronic payments and digital processing, threat intelligence and fraud prevention, and network monitoring and data protection. I had engaging discussions with the delegates about the state of financial services sector in west Africa, the growing threat of cybersecurity, and efforts being made to train the local population to tackle the challenges and seize the opportunity to digitalize Africa's economy.

As an observer of the digitalization of the African continent, this event carried significant importance in light of the Digital Transformation with Africa (DTA) initiative, which President Joe Biden launched to expand digital access in Africa and increase commercial engagement between U.S. and African companies, support increased digital literacy, and strengthen digital enabling environments across Africa. The DTA channels the collective efforts of U.S. and allied government and private sector partners to advance these aims across three pillars including digital economy and infrastructure, human capital development, and digital enabling environment.

The DTA is part of USTDA's Access Africa initiative which supports quality information and communications technology (ICT) infrastructure across Africa. By working with the public and private sectors across the continent, Access Africa brings together critical stakeholders and designs targeted programming to advance inclusive, secure and sustainable connectivity. In addition, Access Africa partners individually contribute to the identification and implementation of USTDA activities that support Africa's ICT sector, including technical, regulatory, institutional and procurement assistance. Lastly, Access Africa provides lasting framework for Africa's public and private sector to partner with trusted U.S. providers and establish ICT relationships that are built to last.

According to the USTDA, as a leading developer and deployer of cybersecurity and data protection solutions, the U.S. private sector is well-positioned to become an essential partner in fortifying network infrastructure in emerging economies' financial sectors. U.S. firms are at the forefront of network monitoring, data analytics, vulnerability detection, artificial intelligence, and blockchain applications. Across Africa, the banking sector has been heavily targeted by cybercrime, with losses of $248 million to malicious cyber activity in 2021.

I appreciate how USTDA's Nigeria and Ghana Financial Sector Cybersecurity RTM allowed public and private sector decision-makers the opportunity to meet with U.S. entities engaged in developing and deploying cybersecurity solutions in the financial sector; establishing policies and regulations; and implementing best practices. The delegates learned about innovative U.S. technologies, financing mechanisms, and best practices to combat cybercrime in the banking sector.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Policy Recommendations for Promoting International Investment by Small and Medium-Sized Enterprises

A report by the United Nations Conference on Trade and Development (UNCTAD), the trade and development body of the United Nations, correctly notes that "Small and medium-size enterprises (SMEs) are important contributors to economic development, representing a substantial portion of businesses globally. Global markets offer SMEs opportunities for growth, diversification and resilience. Access to international markets enables them to tap into new customer bases, gain exposure to diverse business practices and foster innovation through cross-cultural collaboration."

Having supported initiatives aimed to promote international investment by SME's, I support the report's assertion that "SMEs encounter significant challenges that hinder their investment overseas. SME investors, relative to large Multinational Enterprises (MNEs), face distinctive bottlenecks including financial and information constraints, difficulties in dealing with regulatory complexities and, importantly, an international investment environment in which facilitation and investment promotion institutions are often geared towards attracting large-scale investment projects." The report points out "Foreign direct investment (FDI) by SMEs has been in decline in recent years: the number of outward greenfield investment projects in 2022 was only about a quarter of that in 2015."

With financial support of the Kingdom of the Netherlands, UNCTAD's report says that "Based on original empirical studies in different developing regions and selected developed economies, this report discusses how to reduce the common investment policy bias in home and host countries towards large MNEs, the role of SMEs in South–South and intraregional FDI, and ways and means to maximize the development impact of SME FDI." What is more, "It introduces a new framework to assess the relevance and effectiveness of existing investment policies for the promotion of SME investment and presents policy options to facilitate overseas investment by SMEs and reduce the existing policy bias." These policy options include:

• Adjusting investment promotion and facilitation services towards addressing the needs and challenges that SMEs face, so that size does not hinder their access to financial incentives and facilitation mechanisms.
• Establishing comprehensive support networks and designing accessible matchmaking program and events to help small businesses connect and to foster sustained and successful partnerships.
• Improving SMEs' competitiveness by supporting their innovation capacity, including through digitalization, technology adoption and capacity-building.
• Facilitating SMEs' access to capital, including by improving digital services and infrastructure development.
• Simplifying the regulatory and administrative framework and improving access to information by using digital platforms.
• Promoting SMEs' participation in trade to increase their international exposure and knowledge of foreign markets.

I agree with the UNCTAD that "By implementing a combination of these policies, governments can create an environment that supports SMEs in their efforts to invest and thrive in international markets and to harness the related development benefits."

What are your recommendation for promoting international investment by small and medium-sized enterprises?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

5G to Benefit the Sub-Saharan Africa Economy by $11 Billion in 2030

In its annual report on the state of the mobile economy in sub-Saharan Africa, the GSMA says the mobile connectivity on the continent "continues to drive digital transformation and socioeconomic advancements. This underlines the need for continued efforts to address the persisting barriers that impact mobile internet adoption in the region, particularly the affordability of devices, online safety concerns and the lack of digital skills." The UK-based organization that represents the interests of mobile operators worldwide adds: "Meanwhile, authorities and enterprises see an opportunity to leverage growing 4G and 5G networks, alongside emerging technologies such as AI and IoT, to enhance productivity and efficiency in service delivery."

Findings of the report, which is available in English and Français, include:

Growing 5G momentum

"In 2022, there was a marked uptick in 5G-related activities in Sub-Saharan Africa, including 5G commercial launches in 15 countries and a growing number of spectrum allocations. This comes at a time when 3G is the most dominant technology in the region (accounting for 55% of total connections in 2022) while 4G is already dominant in other regions, implying network and customer readiness for the transition to 4G. The approach to 5G in the region will need to consider the current connectivity landscape and unique market features that could affect the rollout and adoption of the technology. 5G network ecosystem players in the region must also find ways to deliver cost-effective and efficient 5G networks, balancing investment and value creation."

Steering growth with AI

"The emergence of new AI tools and use cases is accelerating the implementation of AI across various verticals and business processes. Most AI developments are occurring in advanced markets. However, the technology can be utilized in any scenario where there is sufficient data to draw insights. As a result, several industry players are already taking steps to apply AI across a variety of use cases in Sub-Saharan Africa. The potential benefit of AI in the region is significant, given that it can help offset the impact of limited resources and poor infrastructure in the delivery of many life-enhancing services, such as healthcare and education. Mobile operators in the region have employed AI at different levels, from improving network operations and customer services to achieving efficiencies and cost savings."

Climate-related risks spur circular economy principles

"The concept of circularity has risen to the top of the agenda for policymakers and industry players in light of growing concerns around the generation of e-waste and unsustainable levels of consumption of natural resources. Although the technical lifespan of a mobile device is now between four and seven years, the average use period of mobile devices is only around three years. Governments and industry players have a role to play in incentivizing consumers. This includes building new channels and suppliers to collect, refurbish and resell devices and implementing awareness campaigns on sustainability. Some operators in Sub-Saharan Africa are already taking a lead in this regard, with initiatives to drive circularity in mobile phones and other digital devices."

Infographic: GSMA

Improving smartphone access

"Smartphone affordability is a key barrier to using mobile internet. The average selling price of smartphones in Africa has reduced significantly in recent years, with an influx of devices priced at below $100 – but the cost remains unaffordable for many. The challenge for manufacturers is to produce devices at low enough price points that align with local earning capacities and allow them to gain market share. To ease the current cost burden, operators offer a range of initiatives, including device financing plans, instalment payments and entry-level smartphones through partnerships with manufacturers."

Collaboration and innovation in fintech is on the rise

"Fintech has become increasingly prominent in Sub-Saharan Africa, driven by the need to improve regional financial and digital inclusion. The industry has seen a rise in partnerships and innovation, leading to the diversification of products on offer, particularly in the payments segments. Operators have partnered with ecosystem players to expand products and offer options such as buy now, pay later (BNPL). At the same time, the growing fintech startup industry continues to attract investors, allowing them to improve access to a variety of financial products for both individuals and small businesses, such as microlending and B2B payments."

Policies for safe and inclusive development

"As cyberattacks continue to grow in scale and scope, governments face increasing pressure to protect their citizens and infrastructure and establish a framework for the mobile industry. Sub-Saharan Africa's rapid technological evolution makes the region an attractive target for fraud and cyberattacks."

Infographic: GSMA

According to the GSMA, "5G is expected to benefit the Sub-Saharan Africa economy by $11 billion in 2030, accounting for more than 6% of the overall economic impact of mobile." While it is encouraging to learn that mobile connectivity in Sub-Saharan Africa continues to drive digital transformation and socioeconomic advances, I have concerns about the mobile internet usage gap, which refers to individuals who are not using mobile internet despite living in an area covered by mobile broadband networks. of 59%. Nevertheless, the continent holds significant opportunities for entrepreneurs to develop innovative solutions in AI, IoT, cybersecurity, EdTech, fintech, digital health, e-commerce, and enterprise services.

What opportunities are you seeing the Sub-Saharan Africa's mobile economy?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

GSMA Report Highlights the Challenges and Opportunities for Scaling E-Commerce Adoption by Small Businesses in Africa

There is significant evidence that e-commerce can help micro, small and medium enterprises (MSMEs) reach wider markets and increase their profitability and resilience, according to the GSMA. However, in Africa, online retail as a proportion of total retail sales remains much lower than in other regions, indicating that the continent's MSMEs are not fully leveraging the e-commerce opportunity for growth. The UK-based organization, which represents the interests of mobile operators worldwide, published a report highlighting the challenges and opportunities for scaling e-commerce adoption by MSMEs in Africa.

The insights presented in this study are primarily based on surveys conducted with 1,500 MSMEs currently using e-commerce in over six African markets, comprising Egypt, Ethiopia, Ghana, Kenya, Nigeria, and South Africa. In addition, the GSMA conducted an extensive literature review and interviews with over 40 experts in these six markets, as well as in three additional markets that form part of this analysis: Rwanda, Senegal, and Tanzania.

The report's key findings include:

• E-commerce offers micro, small, and medium enterprises (MSMEs) the opportunity to operate more efficiently and increase sales and profitability. "This is critically important in African markets where MSMEs play a central role in generating economic value and creating livelihoods. E-commerce can support MSMEs to scale by facilitating access to wider markets, lowering barriers to entry for micro and small firms, and enabling women to combine economic activity with other responsibilities more flexibly and efficiently."
• There are three prevalent e-commerce channels: social commerce, the selling of goods via social media services such as Facebook, Instagram, X (previously known as Twitter) and WhatsApp; e-commerce marketplaces, which aggregate large numbers of sellers on a single platform; and own brand websites. "Each channel offers its own unique set of advantages and limitations. While social commerce is most accessible to MSMEs of all sizes due to low barriers to entry for even informal and micro businesses, exclusive use of social commerce, especially informally, limits the professionalization of the business. Much of the sales process in informal social commerce may remain manual, from arranging payments to delivery offline. E-commerce marketplaces digitize the entire sales process for MSMEs, from receiving orders to processing deliveries, but this comes at the cost of commission charges as well as decreased visibility with competing sellers. Meanwhile, company websites create unique brand identities and trust with customers but require more capital and digital know-how."
• While improving connectivity and the steady uptake of mobile phones is spurring e-commerce adoption by MSMEs, much of the e-commerce opportunity remains unexploited. "E-commerce adoption is growing, and market forecasts suggest that there will be almost 600 million online shoppers in the region by 2027. However, the number of e-commerce users in the region in 2022 was estimated at under 400 million out of a total population of over 1.4 billion people, a relatively small proportion. In addition, only five to seven percent of retail payments were digital in 2020. There is therefore a vast opportunity for MSMEs to reach consumers via the trade of goods online."

The GSMA says there are several barriers to scaling e-commerce for MSMEs in Africa. These include:

• Limited financial resources and digital skills: "MSMEs lack access to capital and credit, restricting their growth, and do not have sufficient business and digital skills to fully leverage the opportunities e-commerce offers."
• Regulatory gaps: "Where e-commerce related policies and regulations are absent, dated, or fragmented, they are leading to low business and consumer confidence in online trade. These policies include cybersecurity laws, personal privacy and data protection laws, consumer protection laws, e-transactions laws, and intellectual property laws."
• Implementation of legislation: "Weak implementation of e-commerce related laws is contributing to low consumer trust and therefore limited consumer uptake of e-commerce."
• Low uptake of digital payments: "Cash on delivery remains the preferred payment method in many markets, impacting MSMEs' cash flows, making them vulnerable to losses and saddled with high delivery costs for items returned on delivery."
• Challenging logistics and delivery: Poor road infrastructure, lack of national addressing systems, and fragmented delivery solutions make the delivery of e-commerce goods both expensive and unreliable, reducing the revenue MSMEs can generate from online sales."
• Low consumer confidence and readiness: There are limitations to consumer readiness for uptake, such as limited penetration of smartphones, low digital literacy and digital skills that deter consumers from online purchases and transactions, and low confidence in the quality of goods that might be received via e-commerce due to lack of consistency in product quality.

The report importantly notes that "According to UNCTAD, digital commerce, if leveraged effectively, could add $180 billion to Africa's GDP by 2025. Improving connectivity and the steady uptake of mobile phones is spurring e-commerce adoption by MSMEs in the region." What is more, "The uptake of digital payments is steadily increasing, supporting the growth of e-commerce, although delivery challenges persist due to poor infrastructure and insufficient delivery providers."

The report also explains that "On the demand side, a growing youth population that is more digitally savvy, and a growing middle class in some markets means Africa’s MSMEs have a ready market for online retail. But e-commerce remains limited in urban areas and is yet to penetrate rural areas except for pockets of innovation in agri e-commerce and better last mile penetration in some markets such as Nigeria."

Moreover, "A significant opportunity for MSMEs to reach consumers via the trade of goods online to improve their profitability, create livelihoods and contribute more effectively to economic development therefore remains largely untapped. With the advancement of AfCFTA (African Continental Free Trade Area), there is an even greater opportunity to leverage e-commerce for regional gains."

I appreciate how GSMA's report highlights "some of the main barriers to scaling e-commerce adoption, including MSMEs' limited access to capital and digital skills, gaps in legislation or implementation of e-commerce related policies and regulations, a persisting preference for cash payments in the region and lower trust in digital payments, and poor logistics and delivery infrastructure for the reliable and affordable delivery of online purchases. These in turn impact consumer trust in e-commerce, suppressing demand for online retail."

Do you agree with the report's findings? What are your recommendations for how African MSMEs reach wider markets and increase their profitability and resilience?

​Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

How Africa Can Strengthen Supply Chain Diversification in High-Knowledge- and Technology-Intensive Sectors

"The global supply chain disruptions caused by recent crises, such as the 2008–2009 global financial and economic crisis, the COVID-19 pandemic, the war in Ukraine and the resulting global market slowdown, have intensified the need to promote resilience by diversifying supply chain operations across various countries and regions," The United Nations Conference on Trade and Development (UNCTAD), the trade and development body of the United Nations, says in a report that provides a unique insight into the potential for increased integration into the supply chains in Africa by bringing together knowledge on how Africa can strengthen supply chain diversification in high-knowledge- and technology-intensive sectors.

Entitled The Economic Development in Africa Report 2023: The Potential of Africa to Capture Technology-intensive Global Supply Chains, the UNCTAD's report says "The risks of concentrating manufacturing and supply chains in a few markets and of sourcing and supplying sector-specific intermediate goods from a few locations can increase exposure to shocks and disruptions in production networks and supply chains. By diversifying or relocating to Africa, supply chain participating companies can source some of the inputs (raw materials and intermediate goods) from the continent, while reducing the costs of transportation and logistics and minimizing risks of supplier delivery delays and other challenges. These disruptions and opportunities for supply chain diversification or relocation come at a time when African economies are growing more sustainably."

Moreover on the topic of turning disruption into opportunity, the report explains that "In recent years, global supply chains have come under immense pressure as a result of unprecedented trade turbulence, economic uncertainty, geopolitical events and natural disasters. Consequently, these supply chains were severely disrupted. This has led key players, such as the series of manufacturers, distributors, consigners and so on involved in producing goods of a particular kind and bringing them to market, to re-examine ways to strengthen supply chain resilience. Although the integration of African economies into supply chains is relatively low compared with other regions, disruptions to supply chain operations have a more than proportionate adverse impact on their economies."

UNCTAD also points out that "African consumer markets are increasingly transitioning towards middle- and low- middle-income status with an appetite for more sophisticated goods and services. Moreover, the need for supply chain diversification emerges at a time when Governments in Africa and regional institutions have reinforced their commitments to push forward their regional integration, diversification and industrialization agendas, which are viable strategies for developing industrial capabilities and creating prosperity on the continent."

The aforementioned global trends and pressures have given many economies and businesses pause for thought; they are now rethinking strategies for recovery, renewal, and resilience. Many multinational companies are looking into how they can reduce their dependence on a single supplier and diversify their supply chains to build resilience to current and future global turbulence. Others have explored a more regionalized approach with greater security, allowing firms to source and produce within their home countries and regions. While some of these evolving scenarios may have far-reaching implications for investment and fixed cost – and some companies may not be able to pay the cost – their potential benefits and impacts far outweigh the cost. This is particularly so for supply chains and industries that are highly exposed to geo-physical events, trade disputes and other global stresses.

I appreciate how the report "focuses on the high-knowledge and technology-intensive industries – automotives, electronics, green energy technology and medical devices – that are vulnerable to global supply chain disruptions, partly due to their extensive geographic footprint." I also concur that "Opportunities for diversification of high-value and technology-intensive supply chains can strengthen resilience, foster the participation of technology-enabled enterprises in supply chains and optimize the participation of Africa in global supply chains."

What are your recommendations for how Africa can strengthen supply chain diversification in high-knowledge- and technology-intensive sectors?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.