April 2013

But, warns Steven Cohen, managing director of Sage Pastel, South Africa cannot rest on its laurels

To me, one of the key advantages of technology is its ability to transcend borders. I’m talking about all borders – local, national, continental… especially continental.  I’ve been reading the MasterCard African Cities Growth Index, a study undertaken by Professor George Angelopulo of the University of South Africa (UNISA) for MasterCard. It analysed 19 cities across sub-Saharan Africa and ranked them according to their growth potential between 2012 and 2017. His findings show that we’re in for a major growth explosion in Africa – if we have the right technology in place.  

I’ve been thinking a lot about Professor Angelopulo’s conclusion that one of Africa’s key economic and social challenges is how our cities attract significant inward investment. He says we need to be globally competitive. We can’t do that without technology. He says we need to serve as magnets for investment and growth and become hot-spots of innovation. At the risk of being repetitive, neither is possible without technology. He rates as most important our ability to develop attractive and thriving business environments. This is simply not possible without… okay, you get the picture: it is my firm belief that technology will lead Africa into prosperity. 

A surge in the number of internet users on the continent means greater efficiency for small and medium enterprises. Accra (Ghana), Lusaka (Zambia) and Luanda (Angola) have been identified as the sub-Saharan African cities with the highest growth potential over the next five years, according to the same Growth Index. Johannesburg, as the economic capital of South Africa, is already an economic powerhouse.  It is precisely the city’s relative maturity – our middle class has been growing since 1994 – that gives us lower growth expectations in the index. Fair enough. But take heed: South Africa cannot rest on its laurels.

Think about this. Sub-Saharan Africa has a virtually non-existent telecommunications infrastructure and this has made it easy for them to jump straight to newer technologies like Wi-Fi, broadband and mobile phones.  The same is true of cloud computing. Nations that are cutting their teeth on mobile technologies are not afraid of what those technologies offer them. They’re not stuck in a method they’ve been using forever. On the contrary, they’re embracing the new technologies and taking full advantage of the benefits they offer.

Our own research conducted in conjunction with KPMG in Kenya, the Kenyan Top 100 Mid-Sized Companies Survey, found that 76% of businesses are ready and willing to use software that would enable them to transact over the internet. This is more than 20% higher than the proportion who said they were willing to use internet-based (cloud) software in a survey we conducted amongst accountants in South Africa a year ago. Maybe that number has increased. If we are to remain one of Africa’s economic powerhouses, it will have to.

It all starts with internet usage. I travel to other African countries regularly and the most dramatic rise I’ve seen in internet usage has been in Kenya. This puts Kenya second only to Nigeria in number of internet users. In East Africa, Uganda is not far behind with growth of over 9%. There’s another area where South Africa needs to be aware of what its neighbours are the doing:  the survey highlights Kenya and Uganda as the biggest African users of social networking for business.

Going back to our Kenyan Top 100 Mid-Sized Companies Survey, 95% of Kenyan businesses use computers and internet infrastructure for daily transactions and business management. This high internet adoption in Kenya will be a big shaper of how businesses operate in the future and will set the trend for the rest of Africa.

As managing director of South Africa’s leading provider of accounting and business software I have experienced the connectivity boom first hand. I’m so aware of the fundamental transformation that the entire African continent is going through. This is a population of over 1 billion people. A high proportion of them will look to technology to assist them in their work and in their daily lives. Technology coupled with a skill such as accounting is, as you already know, a winning combination.

Throughout Africa, mobile service providers are taking advantage of the infrastructure gap and a high rural demography. For rural dwellers, the only means to access the internet is through cell phones and mobile operators are vying to corner the market. As ever, increasing competition will lead to a decrease in prices.

Already 27% of rural South Africans and 39% of urban users are now browsing the internet with their cell phones; this is according to a Mobility 2011 research project conducted by World Wide Worx. At least six million South Africans now have internet access on their phones.

Across Africa broadband usage is also expected to grow rapidly with the advent of Seacom, a submarine fibre optic cable bringing high quality, affordable wholesale broadband capacity to the continent. Africa as a whole has recently seen the largest drop in ICT prices, with fixed broadband prices falling by over 55% and mobile cellular prices by 25%.

Simply put, as availability increases, prices will drop even further and the opportunity for business owners to simultaneously cut costs and extend their reach is huge. Low connectivity rates increase the potential for business to benefit from the increase in speed, accessibility, mobility, convenience and effectiveness of the internet. This means that using online business tools for customer relationship management (CRM), business intelligence (BI) and enterprise resource planning (ERP) will gain popularity, following hot on the heels of our accounting management software.

The rapid online adoption that we are already seeing is testament to the go-getter spirit of truly successful people. This is such an exciting time to be in Africa and technology gives you all the tools you need to spread your own business across the continent. As accountants you have skills that everybody needs. What are you waiting for? Go get ‘em!