Is this the Easiest Time to Start a Small Business?
A steady source of income is a coveted luxury – more so in the emerging economies of Asia and Africa. These regions are characterized by large populations and a young workforce. While many governments have enacted minimum wage legislation, it is not always strictly enforced, implying many are just about eking out a living.
Personal finance experts, meanwhile, have always emphasized on the importance of generating additional income streams. Not only does it augment one’s primary income source, but it also creates secondary channels that offers a hedge in the event of unforeseen occurrences. Could the advent of smartphones, coupled with increasing internet penetration possibly benefit large segments of emerging market populations? Could internet use encourage rural entrepreneurship and foster inclusive growth?
Trials and Tribulations
Entrepreneurship is a challenging task – one which requires the proprietor or founders to wear many hats. Besides offering a credible product or service for sale, the primary aspect that will ensure a firm’s sustainability is cash flow. In order for revenue to be generated, there must be sales. This necessitates an advertising or marketing channel. Prior to internet usage becoming commonplace, marketing was an expensive facet of running a business. Moreover, there was no guaranteeing whether one particular medium of advertising even reached the target audience. However, using the internet and social media, advertising is an affordable monetary commitment and one can even choose their target audience.
Apart from offering the obvious marketing advantage, the internet has also led to the growth of e-commerce. Internet marketplaces extend the opportunity to any individual to engage in online trading without the need to set up a brick and mortar facility – implying the initial startup costs are significantly minimized. Numerous online retailers now have astronomical valuations on account of their massive user bases. From education to healthcare and spanning even grocery shopping to entertainment, the internet has ushered in a plethora of opportunities. Its biggest advantage is perhaps the fact that it can be accessed from anywhere there is network connectivity, and at any time.
Internet Entrepreneurs in Africa
Africa has abundant natural resources. Yet, the majority of its population is mired in poverty, unable to access even basics. There is a significant economic divide between the affluent and the needy – and governments, in general, have been slow in responding. The harbingers of change, however, could be technology entrepreneurs who are building platforms that could bring about beneficial outcomes. It must also be highlighted that there are several challenges common across many African states, such as high data costs and a well-founded hesitation among many to share payment information online. An added hurdle is also the literacy rate with countries such as Burkina Faso, Niger and Chad only registering about 30 percent.
However, the internet has allowed for the aggregation model to flourish, enabling an individual to work his or her regular hours and then sign onto an online platform for a few additional work hours. One such example is SafeBoda, a bike taxi hailing service founded in Uganda. There are now over 1,000 riders on the platform.
Setting up a service oriented enterprise is a smart move, more so when leveraging the internet. By no means are the efforts of an entrepreneur being discredited because while the internet has provided a platform, it still takes key skills such as critical thinking, analytical ability and perseverance to nurture a business. However, an entrepreneur in the current era has the tools and support to quickly gain a wide reach. Case in point being Gloria Mukaa, a Kenyan who founded a human resources firm in Nairobi. Commencing operations with a seed capital of only $2,000 in 2013, the company was already generating $400,000 in annual revenue in a span of only four years. It even boasts an impressive clientele.
Advantages of Being Connected
Emerging economies with burgeoning populations must prioritize on increasing internet penetration rates. It is all the more necessary in rural areas where farmers often need an additional source of income, especially so during the lean season. Internet accessibility can be supported with in-person training initiatives, although even online tutorials can suffice. The primary aspect is ensuring reliable internet access.
Considering how the bulk of global GDP is generated by small business, it is imperative for governments to prioritize on internet connectivity as much as other basics. Technology conglomerates such as Facebook recognized this fact and therefore collaborated with six other companies to initiate internet.org. This initiative seeks to leverage on the advantages of the internet to develop new business models. Facebook’s founder, Mark Zuckerberg, summed it thus: “We know that connecting them can help lift people out of poverty, create millions of jobs and spread education opportunities. We care about these people, and that’s why we’re so committed to connecting them.”
Featured Photo Caption: Emerging economies with burgeoning populations must prioritize on increasing internet penetration rates