Ensuring SME scale is smart, sustainable and strategic

Ensuring SME scale is smart, sustainable and strategic
Gregory COUSSA

It’s hard to comprehend that we’re about to reach the two-year mark of the heart-wrenching, head-spinning global disruption brought on by COVID-19. At the risk of belabouring the “how much our lives have changed” point, there’s one thing that we can be sure of – the resilience of hungry and ambitious entrepreneurs. Having spent most of my career helping social ventures scale, both for-profit and non-profit, this resilience is something that inspires me every day.

As we continue the path to recovery powered by increasing appetites in the African entrepreneurship sector, we must ensure that our attention is equally turned to enabling powerful businesses to scale. And not just the ventures which develop and sell life-changing solutions to vulnerable communities; those that provide the needs and desires of the common consumer as well. The data is out, and has been out: Scaling Small and Medium-sized Enterprises is, and will be, a major driver of socio-economic progress in Africa, let alone the world. Scale – the murky, overused word that means a million things to as many people – is complicated, difficult, painful and beautiful. To make it less complicated, difficult, painful and more beautiful, we need plans.

The importance of being strategic in this effort can’t be overstated. Firstly, and perhaps obviously, developing and agreeing on what the plan is with co-founders, the board, key investors and those die-hard cheerleaders in the inner circle is a crucial first step. Only then can SMEs put the steps in place to achieve this. And when it comes to execution, growing the operations, infrastructure and footprint of an SME in a developing economy takes the kind of time and energy that calls for a full-time role.

Despite this, we seldom see positions in the leadership of SMEs reflecting this. Whether it’s a newly created role focused purely on scale or agreeing that a large proportion of one person’s remit will hold the torch for the scale strategy and operations, it needs to sit comfortably and realistically with one person to allow the kind of focus, management and attention it deserves.

SMEs face several challenges which make it difficult to scale sustainably. Therefore, before anything, there needs to be a clear diagnosis of the current context to ensure that scalability is possible, realistic and strategic. Only from there can you move toward the other components – marketing, leadership development, organisation structure, systems and processes, etc. – on your road to implementation.

When it comes to technology, we see two trends: There aren’t enough scale-stage software-focused SMEs in the market (but we think this will change in the next few years); 2. The importance of technology in any SME’s scale journey is paramount – but underutilised. From using data to inform key market expansion decisions and changes in consumer habits to ensuring accounting and finance systems are locked in tight, the use of technology to power scalability isn’t only overlooked but also under-supported.

For this reason, we collaborated with one of the largest global organizations to create a program specifically designed to power SME scalability. Under the Mastercard Foundation’s Young Africa Works program, the MEST Scale acceleration program supports SMEs in Ghana to develop and/or strengthen their scale strategy, business model(s) operations, solutions to address key technology gaps, and increase their leadership team’s capabilities and capacity to scale. Working specifically with for-profit businesses that have at least three years of commercially viable operations, we stand committed to helping these innovators change the lives of everyday citizens in their communities.

There’s a clear delineation between scaling a hardware-based SME to that of a software-based SME. The tailored advisory support and panel of specialist consultants we convene to guide SMEs in the     program ensures that both are catered for in their own unique way.

Encouragingly, there are numerous case studies in the African ecosystem that stand as inspiration. For instance, Viamo is a software-based company that improves lives via mobile by reaching the most isolated populations and provides them with information to make informed decisions for a healthy, prosperous life. Since inception in Northern Ghana back in 2012, Viamo now covers more than 20 major markets in Africa and Asia reaching more than 100,000 people each day.

In the property sector, Cofundie, a MEST portfolio company, has created a solution to Africa’s housing shortage crisis by providing a regulated trading platform for housing developments across Ghana and Nigeria. By harnessing the power of crowdsourcing and placing an emphasis on the use of sustainable and alternative building materials, Cofundie has pioneered a source of untapped funding for developers while increasing the accessibility to long-lasting homes for Africa’s growing middle-income demographic.

Though fundamentally different in their sectors, infrastructure, and purpose, both of these for-profit, for-good businesses have one thing in common – they are scaling, strategically, to increase their social and financial bottom-lines.

This brings me back to the original point: I’m blown away not just by the number of amazing SMEs that have survived through COVID-19. It’s not all rosy – there are a lot of SMEs that didn’t survive, and these amazing ventures aren’t out of the woods yet. Now is the time for more organisations (Impact Investors, bi-laterals, multi-laterals, philanthropic funders, entrepreneur-support organisations-ESOs, etc.) to drive more awareness and resources to SMEs across Africa to help them scale up.

The writer is a Strategic Director, MEST

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