Africa’s big telcos look to small businesses in B2B growth plans

Africa’s big telco groups are stepping up efforts to woo small and medium-size enterprises (SMEs) across the continent, as the customer segment becomes an important growth driver in their B2B strategies.

There are more than 40 million SMEs in the diverse Sub-Saharan Africa region, according to the World Bank. They are significant contributors to African economies, accounting for around 80% of jobs across the entire region. And in Ethiopia, Kenya and Uganda, SMEs employ about 90% of the population, according to the African Union Development Agency. However, small businesses, particularly in emerging markets, have been a concern for development agencies because of the obstacles they face when it comes to accessing resources and financing compared to bigger companies.

While telcos won’t solve all African SME challenges, they are certainly adapting products to provide connectivity, ICT services and mobile money solutions that can help small businesses to grow.

SMEs account for larger revenue share

At its Capital Markets Day in May, Africa’s MTN Group said it expects the SME segment to be the biggest source of growth in its enterprise unit, outpacing growth from large enterprises in the coming year. In full-year 2022, SMEs, which have less than 200 employees, already accounted for 52% of MTN’s enterprise revenue, while large enterprises and multi-national corporations accounted for 48% of enterprise revenue.

Jens Schulte-Bockum, Group Chief Operating Officer at MTN, said the operator is “excited” about the enterprise opportunity despite the challenging macro-economic environment for businesses. He explained there is increasing “professionalism” of enterprises, and particularly in the SME segment, whereby “informal” small businesses are “formalizing”. That means that “for the first time, they are looking at new connectivity and digital services that we can provide,” he said.

Of the more than 40 million SMEs in the region, about 10% are within MTN’s scope, according to Tumi Sekhukhune, Group Executive of Enterprise Business Unit at MTN. That is, within the main markets where it targets enterprise services: Cameroon, Cote d’Ivoire, Ghana, Nigeria, Uganda, and South Africa. The operator is offering not just connectivity but also cloud, security and IoT services “so that they can grow” their businesses, she said.

As part of its outreach to small businesses, MTN held an inaugural “SME Day” in May where it demonstrated its ranges of offerings, including its Mobile Money (MoMo) platform; Ayoba super app for messaging, content sharing, and money transfers; and Chenosis, the operator’s API marketplace and developer platform business.

Enterprise is one of the platforms for accelerating growth in MTN’s Ambition 2025 strategy. In full-year 2022, MTN reported enterprise revenue of R21.4 billion ($1.1 billion), which is 10% of the Group’s total revenue. By 2025, the operator targets more than R30 billion in enterprise revenue, which would be about 10%-12% of the Group total.

Vodacom takes on trusted advisor role

Vodacom Business, which operates across seven markets in Africa, is taking a different marketing approach to the SME segment with a new brand campaign that recognizes the economic stress that businesses are under and positions its offerings as “turning problems into possibilities.” The operator is upfront about business headwinds including energy and skills shortages, inflation, climate change, and supply chain disruption.

According to the World Bank, economic growth in Sub-Saharan Africa dropped to 3.6% in 2022, down from 4.1% in 2021. The region is expected to experience a further economic slowdown to 3.1% in 2023.

With its new business tagline, “Turn to Us,” Vodacom is staking its claim to be a trusted advisor for SMEs, which echoes the approach of its majority shareholder Vodafone Group.

Like Vodafone, Vodacom offers the digital advisory service called V-Hub, which is designed to help SMEs better understand, build confidence and adopt digital tools to grow, protect and sustain their businesses. The operator also offers a B2B digital marketplace called Vodacom Trade Direct where small businesses can register to sell and buy services.

Mobile money opportunity for SMEs

As Africa is the home of mobile money, operators also have an opportunity to expand their fintech services to meet the needs of micro and SMEs, and some are already doing so. According to McKinsey, SMEs are a “significant untapped opportunity” in the region’s payments sector as many move to online e-commerce. The firm’s recent Africa Payments Survey found that 92% of respondents expect at least 25% of SMEs in Africa to have an online presence within the next three years.

Airtel Africa is expanding its Airtel Money business and with the aim of being a “one-stop shop” for financial services. It offers mobile wallets, merchant payments, enterprise disbursements, international money transfers, and loans and savings. The operator grew its Airtel Money customer base by 20.7% to 26.2 million in the fiscal year ending 31 March 2023. Mobile money customers are now 20.4% of Airtel Africa’s total customer base. The operator attributed the customer growth in part to an increase in “mobile money agents” and “merchant ecosystems”.

According to the GSMA’s 2023 State of the Industry Report on Mobile Money, Sub-Saharan Africa continues to have the biggest mobile money user base with 763 million registered accounts out of the global total of 1.6 billion. And it is still growing. The number of accounts increased by 17% in 2022, while in the Middle East and North Africa region, registered accounts increased by 7% to 59 million.