Guest post by Ken Njoroge, co-CEO of Cellulant
The COVID-19 pandemic is having a significant impact on businesses and the economy both at a global and local level. The domino effect on Africa’s informal sector, small and medium enterprises has been and continues to paint a grim picture.
A good number of micro-businesses in the service industry which employ thousands of Africans rely mostly on foot traffic have shut down. This poses a fundamental challenge not just for business owners, private sector leaders but also for the economy as most African governments rely on income from taxpayers to fund development projects as well as delivery of essential services.
Already, Mckinsey estimates a drop in Africa’s GDP growth rate by 0.04 percent in the ‘least worst case’ and by -3.9 percent in case the crisis is not contained globally and in Africa. Organisations and businesses of different sizes have, in the last few weeks, had to layoff or send their staff on unpaid leave. This is unlikely to abate.
The travel and hospitality industries have been the most vulnerable and were the first major casualties of this crisis. However, the ripple effect will be felt across all sectors triggering an economic downturn as the rate of unemployment begins to skyrocket and the purchasing power for most consumers continues to decline. Should this crisis continue for another 6 months, an economic recession is imminent.
It’s no longer business as usual, its digitization unusual
As governments continue to implement curfews and lockdowns in order to enforce social distancing, consumers are now engaging with businesses through online channels. Large consumer segments especially the older generation to whom this whole digital world held little appeal are now becoming active users.
In the wake of the current crisis, digitizing has moved from being a posterity agenda debated in boardrooms to a survival game with many casualties in what has become the new normal. Within just weeks, the world has been flung into ‘Digitization Unusual mode’ as businesses find ways to survive and ensure continuity. The COVID-19 crisis has become the single biggest catalyst for a digital transformation and has moved digitization from a niche market into mass adoption.
The level of digitization in Africa has generally been quite slow. For all the hype that has been surrounding digital transformation in the past, most industries across Africa have generally been very conservative. This is likely to change and very quickly.
There is an immense opportunity for business to re-invent their business models to enable the delivery of their goods and services online. For us in the payments business, we have to prepare for the inevitable change in consumer behaviour which is likely to spur a lot more digitization for a whole range of services to ensure that the payment platforms and the customer journey are able to cater for different sectors in the new context.
Digital payments have now become a critical service as the governments and regulators implementation short term measures meant to encourage the use of cashless transactions. Going forward, there will be more intentionality on regulations that will accelerate the digitization of services and payments.
Thriving in a post-Corona world
Our response as business leaders to the current crisis has been in 3 phases.
The first reported cases in the continent triggered phase one; businesses have had to make whatever necessary adjustments needed to survive this health crisis by moving to quickly sensitize and ensure the health safety of their staff and customers.
The implementation of various social distancing measures by governments organisations to adjust to a new way of running operations remotely as teams learn to work from home ushered us into phase two and continues to pose a significant challenge. Few businesses had invested in the infrastructure, policies and guidelines to implement. For most, this has been akin to building an airborne plane.
The first two phases have been towards getting into hibernation mode for survival. Most business leaders have executed fantastically for the hibernation mode. The question now is, what type of mindset do you want to emerge with during this digitization unusual period?
The victim who has adopted a wait and see attitude or the one who reads the signs of the times and has started to prepare for the world after? Moving beyond this mode to look out for the not so obvious opportunities to recoup and thrive in a post-Corona world continues to be the greatest test of visionary leadership.
Jack Ma’s quote though brutal is very honest; Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful. However, majority of people will die tomorrow night. Most businesses will not survive tomorrow night to see the day after tomorrow.
What will Africa’s comparative advantage be in the new world?. How can Africa emerge better? As Africa’s business leaders, we need to be preparing to thrive in that new world, whichever way it pans out.
By Ken Njoroge
Ken is a co-founder and co- CEO of Cellulant. He is a mobile commerce evangelist and career entrepreneur who has led the company from an idea sketched on a serviette in 2003 with his co-founder Bolaji Akinboro, to one of the leading financial technology company in Africa. He is unwavering in his pursuit of seeing Cellulant achieve its mission of building a world-class, values-driven $1B business for Africa, by Africans, in Africa.
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