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Enabling SMEs in East Africa

Speech by Kunle Awosika, Microsoft Kenya Country Manager during Connected East Africa
Ministers from the East African Community
Distinguished Guests,
Members of Press,
All protocols observed,
Ladies and Gentlemen,

Thank you for the opportunity to address you today during the 7th edition of the Connected
Kenya - now Connected East Africa event.
I would like to begin, if I may, with a story.
Felix Musau, grew up in a farm in Masinga - rural Kenya, and like many other families in
Africa his family depended on farming for livelihood. His dad had made a huge investment in
agriculture, and yet was always frustrated because of the poor return on investment. Years
later while working as a consultant in the Payments space, Felix realized that many other
farmers living in the rural areas of Kenya, were struggling just as his father did to acquire
optimize their investments, access new markets, connect to the financial value chain and
reduce their cost of doing business. Thats when an idea hit him and he created AGIN - an
innovative solution that providing key services smallholder farmers need to succeed in their
enterprises such as financial inclusion solutions for farmers in Kenya. AGIN, itself a small
business, seeks to bring together all value chain players and drive efficiency for service
providers in acquiring, serving and distributing their products to smallholder farmers, the
goal of which is to reduce the cost of doing business and increase profitability and
sustainability of these enterprises.

AGIN is just one of the many incredible innovations coming out of East Africa. Entrepreneurs
in this region represent the true definition of innovation. Entrepreneurs in East Africa are
not just creating products. They are creating solutions that are directly solving local
challenges. Whether it is a challenge in the agricultural, healthcare, financial or education
sector, they are hungry to create solutions that have market relevance and that talk to the
needs of their communities.
Because of this, entrepreneurs, startups and small to medium enterprises or SMEs are
becoming, if they are not already, our most valuable resources. In the process of improving
lives, they are creating jobs. In the process of creating jobs and paying taxes, they are
substantially growing local economies. In other words, they are the economic lifeblood of
our continent. The World Bank last year found that SMEs make up 90% of private businesses
and contribute more than 50% of employment and GDP growth in Africa. SMEs are
improving the overall competitiveness of the African continent helping to make us worthy
players on the global stage.
The story of AGIN is one of my favourites because it speaks to the power of the SME in
Africa. It highlights three significant trends that we are seeing amongst SMEs at the moment
trends that if invested in, will significantly grow and improve our entrepreneurial
Firstly, the purpose of AGIN is to capture vital information about their smallholder farmers.
It is no secret that we are living in the era of Big Data. And its all incredibly valuable data, if
we process it and use it optimally. You will hear a lot of people say that Big Data is the new
oil. By extracting oil and refining it, it helps machinery to run efficiently. Likewise, by
extracting and refining Big Data, we can use it to inform, optimise and run efficient
businesses and processes thereby increasing the overall productivity of our economics.
Felixs idea for AgIN came about after he processed public data and saw a gap in the market.
The data he gathered was that almost 80% of people in Kenya live in rural areas and derive
their income from agriculture. That agricultural support services contribute 23% to Kenyas
GDP. That the agricultural sector employs 65% of the labour force. But that despite this,
farmers are still struggling to establish credit profiles. Felix is now collecting data of his own;
vital information about farmers including: sizes of farms, GPS locations, soil compositions,

weather information, crops grown by farmers and previous yields. This information is
helping banks, insurance and input providers, and buyers all gain insights into the financial
status of farmers. As a result, farmers who were previously part of the informal sector are
now receiving loans and enjoying financial inclusion. In fact, to date, AGIN has facilitated
over $25 million of small loans to over 135 000 farmers in Kenya. It is therefore in our best
interests to collect and share Big Data in a transparent, accessible, valuable and meaningful
The second thing that AGIN is doing which highlights another trend in the SME sector - is
collecting all this data through mobile phones. Farmers use their mobile phones to enter all
the information and engage with their stakeholders. What was previously a paper-based
operation is now done quickly and efficiently on mobile, making business operations more
transparent and information easier to access.
Since the advent of mobile technology, Africa has increasingly been identified with being the
worlds foremost Mobile-First region. Kenya is renowned as a leading the global mobile
economy. M-PESA, the mobile money service, currently has 15 million active users. 30% of
the countrys GDP flows through mobile phones, which are currently more accessible than
clean water and lightbulbs. SMEs have recognised this as an exciting business opportunity
and have started to use mobility as a resource to develop more and better innovations,
improve business processes, reach more people and gather more Big Data.
Another example of an SME who is effectively using mobile is Africa118. Africa 118 is a
mobile directory service that was founded in 2010 by Ezana Raswork. He was working at the
Yellow Pages when he got a frantic call from his father. His father was looking for a local vet
to urgently attend to his puppies, but he couldnt find any. Thats when Ezana developed a
world-class online mobile directory- cloud based service, which makes business information,
such as locations, operating hours and contact details, easily available. Which brings us into
the third trend amongst SMEs: The use of Cloud technology. More and more SMEs are
embracing the Cloud, for four key reasons:
1. It reduces the cost of doing business. For a small business, this is the biggest and
most attractive feature. Cloud technology removes the need for expensive hardware
and servers. This, in turn, means that SMEs can take advantage of previously

inaccessible technology to offer their products and services at more affordable and
competitive prices, helping to lower the barriers of entry for their consumers.
2. They can safely collect, store, process and analyse Big Data with the relevant tools.
All the information that AGIN collects is stored and shared via the Cloud.
3. In 2013, South Africas National Small Business Chamber conducted a survey
amongst SMEs. They found that one of the largest obstacles facing small businesses
is not financial, but rather access to markets. The ability to reach larger markets and
expand customer bases is the biggest difficulty especially when having to compete
with established businesses. The Cloud helps to solve this, because it makes products
and services available anytime and anywhere. Because anyone with an internet
connection can access the Cloud, SMEs are easily able to reach new, larger and more
far-reaching markets outside of their immediate communities.
4. Customers can safely buy their products online. The Cloud is helping to facilitate eCommerce services like Skrill, a payments platform enabling users can buy, sell and
even send remittances back home online. With the rise of mobile money in Africa,
solutions like Skrill are helping SMEs to trade across borders, increasing local and
global competitiveness. As Cloud technology and services grow intra-Africa trade,
this is fast becoming a more tangible reality.
Africa has not in the past enjoyed a culture of trading amongst ourselves. In fact, as it
stands, intra-Africa trade is only at 12%. Compared to the 61% of trade within the European
Union, this number is low. However, the International Data Corporation has predicted that
in 2015, we will see closer cross-border trade. And it will be because of ICT and Cloud
initiatives, such as payment systems, taxation systems, financial inclusion initiatives among
others. A study we did with the Boston Consulting Group found that tech-savvy SMEs create
twice as many new jobs and grow revenues 15% faster than SMEs using little technology.
A number of African countries are recognizing the role of the SME sector in driving of
economic growth, social development, youth employability and a key lever in the
enhancement of Africas global competitiveness. However, due to various challenges, many
SMEs close their doors within the first year.

SMEs are, and have always been, one of Microsofts most important focus areas. We have
been operating on the African continent for 23 years and our work with SMEs has been both
a rewarding and educational experience. To that end, the Microsoft 4Afrika initiative
pledged to bring ICT services to 1M new SMEs across Africa by 2016. This will be made
possible by delivering locally relevant services to SMEs through web and mobile applications
on diverse hardware and software platforms.
And so, today, in light of this, we are proud to announce the launch of the Biz4Afrika online
portal for Kenyan SMEs. This online hub aims to support the SME sector by aggregating
online solutions, freemium offers and relevant services, complimented by valuable content,
locally relevant information, resources and learnings in one place,

Biz4Afrika is a growing Africa-wide network of SMEs designed to enable a sustainable and

connected community of entrepreneurs that will have a meaningful impact on job creation,
global competitiveness and wealth creation in the long run. In the past year alone, weve
seen 140,000 SMEs go online across Africa to offer, and to consume services enabled by

In recognizing that every SME is different, Biz4Afrika has set up 3 entry points to meet the
needs of every SME regardless of their state of maturity whether the business is a new
venture that wants to realise their full potential, an existing businesses aiming to boost its
profitability or an established business that is ready for expansion of its product portfolio or
market base. Content on the portal is based on various categories including accounting,
finance & Insurance, legal, marketing, business opportunities, business services, people and
technology among others.
I invite the different government ministries and private organizations to visit and offer their services to SMEs and invite SMEs to visit the portal to
consume and offer their services to fellow SMEs.
In conclusion, I refer AGINs story to challenge both the public and private institutions
represented here today.

Through the various governments visions and initiatives such as the Connected East Africa,
may we strive to provide the right tools, create an level playing field that enables
entrepreneurs and small business to thrive.
I read a wonderful quote the other day which says: SMEs are the spark that will ignite and
launch the economic rocket that is Africa. Today, seven of the 11 fastest growing
economies in the world are in Africa. By empowering and nurturing the entrepreneurial
spirit of Africa, just imagine what a powerful rocket that will be!
Asante Sana!