By Manan Sharma

With 44 million micro, small, and medium enterprises (MSMEs) in sub-Saharan Africa, of which 97% are microenterprises, “Digital Services for Microenterprises” present a compelling opportunity within the Jobtech landscape in Africa, as this sector significantly contributes to employment and economic activity. Platforms offering Digital Services for Microenterprises help microenterprises with improved efficiency, increased revenue, and broader market reach. 

Our landscape scan on Digital Services for Microenterprises categorizes these digital services into three subcategories: ecommerce marketplaces, social commerce or digitally-enabled agent models, and business management tools or vertically-integrated platforms and explores prominent start-ups (e.g., Jumia for e-commerce, Tendo for social commerce / agent model, Wasoko for Business Management tools), sub-sector specific challenges (e.g., acquiring and retaining customers in Africa using traditional e-commerce models), and growth drivers (e.g., need for offline touchpoints leading to increase in social commerce models).

Taxonomy for Digital Services for Microenterprises

Sub-segment	Description
E-commerce marketplaces	Platforms which enable microenterprises to more easily earn income from selling products through centralised listing platforms or marketplaces.
Social commerce / digitally-enabled agent models	Digital platforms which enable microentrepreneurs or agents to more effectively sell products or services to their networks
Business management tools / vertically-integrated platforms	Platforms which enable microenterprises to increase earnings or profits through enhanced efficiencies and reduced costs.

The business models within this sector vary, encompassing listing fees, commissions, subscriptions, advertising, sales or supply chain, warehousing / deliveries / fulfillment, and layered financial services. One of the critical business model decisions for platforms in this domain is the decision between acting as an intermediary marketplace or an augmentation platform (SaaS-type business).

We also dissect the challenges being faced by the sector as a whole – the need for offline presence in ecommerce, the significant dependence of microenterprises on ecommerce platforms, and the challenges of differentiation in the face of slowing venture capital are highlighted in the landscape scan. However, increasing female participation and low barriers to entry (e.g., virtually no barriers to entry for social commerce / agent driven models) inspire confidence in the potential of the segment to create inclusive and wide-ranging impact.
  

For a more in-depth understanding of Digital Services for Microenterprises in Sub-Saharan Africa, you can access our landscape scan here. 

A short version of this Landscape Scan is also available as a video-based e-learning course on the VC4A website here


The Author, Manan Sharma, is a Venture Building Extern at the Jobtech Alliance