After COVID-19 outbreak, the African Union in collaboration with UNDP and AfriLabs worked together to implement the first African business simulation that seeks to help Micro/Small/Medium Enterprises MSMEs to overcome the current COVID-19 challenges and the lockdown. More than 400 participants and 10 different partners have been involved in building and participating in the simulation in 2020 from 5 different countries: Cameroon, Egypt, Sudan Senegal, and Zimbabwe.
Final Report www.RolloAfrica.com
Rollo Africa Business Simulation - Pilot Phase Cameroon - Egypt - Senegal - Sudan - Zimbabwe
African SMEs’ Performance and Behaviors During the COVID-19 Pandemic
March 2021 Submitted to: African Union - UNDP - AfriLabs Submitted by: Rollo Africa
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Table of Contents
Executive Summary
1
Introduction
3
Rollo - Future of African SMEs
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Part 1: Rollo Africa Business Simulation
7 7 7 8 8 9
1- Campaign and applications 2- Team structure and diversity 3- Shortlisting and Interviews
4- Implementation and simulation results:
1. Egypt Simulation 2. Sudan Simulation
11 13 15 17 19 22 25 26 26 26
3. Senegal Simulation 4. Cameroon Simulation 5. Zimbabwe Simulation 6. Rollo Africa Master 5- African SMEs Modeling
6- African SMEs Strengths and Weaknesses 7- Performance of the Informal businesses 8- Performance of Women-led businesses 9- Performance of African Diaspora
Part 2: African Businesses Analysis
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30 30 30 31 33 35 38 46 46 47 47 48 48 51 52 52
African SMEs Situation Analysis
1- Access to fnance
Need of fnance Types of accounts
Financial Institutions & the Financing Environment
Formal versus informal sector Financial Products for SMEs
2- Electricity and power supply
Importance of electricity for the SMEs
Fossil Fuel
The role of governments in promoting green and renewable energy
Alternative Sources of Power
Power Supply and Pricing for SMEs
3- Internet Connection and Broadband
Importance of Internet for SMEs
ISP, Internet packages, Pricing & Services
4- Cybersecurity and security of digital tools
62 62 64 66 67 68 70 74 74 76 77 78 78 80 80 82 82 84 84 85 86 87 88 89 92 92 92 92 92 94 95 99
Internet dependency Information Security Hacking Incidents
Security Tools
Government Support Regulatory Framework
5- Taxes & duties
Paying Taxes
Tax system’s efciency and transparency
Taxation Fairness
Tax scheme imposed to SMEs
Digital declaration
10- SMEs Managerial competencies
Managerial Level
Management Knowledge Managerial Functions
11- Corruption & transparency
Corruption Awareness
Combating Corruption & Government Eforts
Corruption Impact
12- Negative perception 13- Access to Information
14- The role of governments in supporting SMEs
Part 3: COVID-19 Impact on African SMEs
1- Situation analysis
A- Health Systems
Availability of Health Services Access to Health Services B- Scarcity of medical resources
C- Government's Measures D- Information Circulation
2- Impact on African SMEs
102 102 102 103 104 104 105
Nature of the impact Business expenses cuts Business expansion Government Assistance
Challenges facing African SMEs
Challenges before the COVID-19 pandemic Challenges during the COVID-19 pandemic
105 Change in reported challenges before and during the COVID-19 pandemic 105 Most Afected Businesses 106
3- Impact on teams and capacities
107 107 108 109 112 113 116 118 119 121 122 125 125 125 126 127 128 129 129 130 130 131 131 132 132 132
Type of employees Team Capacity Remote Working
Sick Leaves
Households and children Training & Development
4- Power outages
5- Internet breakouts
6- Corruption
7- Business Continuity Plans BCP
Part 4: Program Recommendation, Suggested Actions & Public Policy Insights
1- Finance
2- Electricity and Energy supplies
3- Networks, Internet connection and broadband
4- Cybersecurity and digital protection
5- Human resources 6- Taxes and duties
7- Business sustainability 8- COVID-19 Measures 9- Health and safety measures
10- Capacity Building
11- Corruption
12- Negative perception
13- Access to reliable information
14- Government's policies
Executive Summary
After COVID-19 outbreak, the African Union in collaboration with UNDP and AfriLabs worked together to implement the frst African business simulation that seeks to help Micro/Small/Medium Enterprises MSMEs to overcome the current COVID-19 challenges and the lockdown. More than 400 participants and 10 diferent partners have been involved in building and participating in the simulation in 2020 from 5 diferent countries: Cameroon, Egypt, Sudan Senegal, and Zimbabwe. The main objectives were to guide and help the participants to adapt their business strategies during the pandemic and to help governments and decision makers to better understand the current impact and the new positioning of mSME during COVID-19. This report will cover 4 main parts: (1) Rollo Business Simulation (2) mSMEs Dynamics and behaviors (3) Impact of COVID-19 on small businesses (4) Program Recommendations. Business Simulations have been used for longtime in capacity building in diferent international universities and big corporations as a learning-by-doing technique. In this project, we introduced it for the frst time for small businesses in Africa as a new tool for online capacity building helping business owners to test their strategic decisions and managerial skills in a risk free environment. 85% of the involved SMEs and participants indicated they were satisfed/very satisfed with the simulation experience while 98% indicated that it was their frst time ever to know about business simulation. The Simulation was successfully implemented from August 2020 to January 2021 in form of a business simulation competition managed and implemented by AfriLabs local partners and innovation hubs. The local hubs implemented the recruitments, interviews, shortlisting, and facilitated the local Simulator.
The key results of the project:
1- Training of 360+ African Entrepreneurs from 120 Small businesses to make business and fnancial decisions in diferent market outlooks like: fnancial recession, global pandemics using advanced business simulation technology. The total amount of hours spent in the simulator exceeded 1,500+ working hours/ 60+ Cumulative days. 2- Collecting signifcant data from 5 countries: Cameroon, Sudan, Egypt, Zimbabwe, Senegal that can help policy makers and fnancial institutions to be better understand and monitor the impact of COVID-19 on small businesses this include: fnancial performance, business continuity plans, health, security, safety, access to fnance and debt management, ofce space, access to resources, business model alterations, digital transformation, cyber security, and governments responses. 3- Identifying the level of competitiveness of African businesses compared to worldwide trends in the simulator. Egypt scored 98% followed by Sudan 95.5% and Senegal 90%, Zimbabwe 87.5%, and Zimbabwe 87%. A score of 100 would refect that the team/country performs inline with the benchmark. The benchmark is set by accumulation of previous participants inputs/decisions. Above 100 refects superior performance to benchmark, below low 100 indicates less than adequate performance relative to benchmark.
4- Modeling African SMEs decision making process departing from the following business aspects: Setting product pricing, setting fnancial goals, Asset management, fnancing,
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budgeting, cost management, logistics management, and Risk Management, This can help the Financial institutions, policy makers, international organization to create better economic models and policies that can help stimulate the implementation of agreements like AFCTFA and AU2063 Agenda. 5- Monitor the Informal sector and other communities including women led businesses and diaspora. A special quota was given to monitor the performance of the informal sector in a well structured economy. 80% of the informal businesses decided to drop-of from the simulator and were replaced organically by the local hubs with formal businesses. The highest number of the informal sector is not ready and/or not willing to be in a well structured environment. (This is should be studied closely)
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Introduction
The global economy faces its greatest danger since the fnancial crisis. COVID-19 has disrupted people’s lives as well as the global economy. Restrictions on the movement of people, goods, services and containment measures have impacted daily laborers, freelancers, SMEs and corporates. In 2020, the African economy was expected to experience change. In the coming years, it is expected that new jobs will be created, others will be lost, consumer patterns will change and new products will be introduced. In addition, health and hygiene will be increasingly important in consumer decision making. While this change will be widespread in all sectors, small businesses in the informal sector will likely be the most afected. The African Union (AU) through the Citizens and Diaspora Directorate (CIDO) has implemented a COVID-19 Citizens preparedness response survey. The results of the survey demonstrate that the most vulnerable communities are those living in densely populated areas, and businesses: MSMEs and the informal sector. Thus, The African Union, UNDP and AfriLabs collaborated together to help mSMEs to overcome this challenging situation. From March to August 2020, The partners had several meetings addressing this issue and decided to test Rollo business simulation in 5 diferent countries representing the 5 regions. The discussion involved many other local partners and local experts to better understand local needs. The implementation of the simulation started from August 2020 and ended in January 2021. In fact, Half of all workers in Africa are considered to be self-employed, the vast majority of which within the informal sector. Around 40% are employed within Micro/Small and Medium MSMEs sized businesses. Large businesses account for only 15% of total african employment but nearly 40% of all the formal jobs on the continent. Mckinsey Global Institute expects that one-third of all jobs in Africa are infuenced by the pandemic. This includes nearly 150 million jobs afected by losses or salary reductions. This will directly impact jobs in retail and wholesale, manufacturing and construction, which make up to 60% of all jobs in the formal sector and 80% of jobs in the informal sector. The study also predicts that the agricultural sector, which employs a large fraction of the region’s workforce and vulnerable communities, will be negatively afected resulting in approximately 20 million jobs lost or experiencing salary reduction. COVID-19 threatens to create multiple challenges for SMEs across the African continent: ● A change in consumer behaviors, resulting in drop in demand and revenue loss. ● A drop in business continuity including delayed payments without enough revenue compared to ongoing expenses like rent, utilizes, bills. ● Cash burn and inability to pay forces SMEs to reduce salaries or close business. ● Businesses are forced to add new protection measures to contain the virus which increases the running costs. ● High risk of infection within employees and customers in crowded businesses areas. Governments in Africa have committed a total of 7.5 billion USD and economic stimulus packages to support recovery from COVID-19 restrictions. This will include through credit guarantees, credit reliefs, and low-interest loans. In march 2020, the Central Bank of Egypt approved a 6 months long fnancial regulatory framework to support small business. This framework includes a hold on loans and credit card payments, increase of withdrawal limits, cancellation of bank fees and commissions for ATM withdrawal and suspended penalties for late payments. It also includes a lowered interest rate by 3% and a debt relief initiative to support around 1 million borrowers.
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Rollo - Future of African SMEs
In Africa, the entrepreneurship ecosystem, as well as small and micro businesses have expanded in the last decade. However, support systems for small businesses have historically been inspired and developed outside the continent. Some examples include coworking spaces, incubators, hackathons, and accelerators which tend to best address and ft formal businesses that have a diferent level of maturity, market outlooks and investments needs. For the past years, it has been highlighted that African businesses need a new model that respects the local context, level of maturity, background and local education, growth of business, and response to local risk and crises. This became most clear when COVID-19 hit small African businesses and the ecosystem experienced a shutdown. Rollo is a business simulation program dedicated to inspiring and supporting small African enterprises facing challenges after the COVID-19 outbreak. It is composed of three-fve intensive simulation days in which enterprises learn to manage and operate in a competitive environment within diferent market outlooks. The programme provides a platform for African entrepreneurs to create ideas and test new strategies in a simulated and risk free-environment. Rollo believes that competition encourages creativity and creates more opportunities, as such Rollo enterprises are ranked based on their proftability and market share within the simulated environment. Best performing enterprises advance to Rollo Masters where they showcase their results and achievements in front of leading African business leaders, experts, investors and government representatives. The Program was equally matched by a series of surveys addressing diferent types of challenges that African SMEs are encountering during the COVID-19 pandemic. The purpose was to highlight the situation of African SMEs during and post COVID-19 as well as the possible Public Policy pathways to save this critical economic lever. This report highlights data collected from participating SMEs in the Rollo Africa Program. Analysis of the data brings new insights and implications for public policy engaged by African governments. It presents the fndings of research into the main recommendations for policy and donor eforts to promote small and medium-sized businesses in Africa. The research follows an outcome analysis methodology. The focus is on fve countries: Egypt, Sudan, Zimbabwe, Senegal and Cameroon. We take our research through 14 levers of the challenges faced by African SMEs like Access to Finance which is the number one challenge for SMEs expansion. We also investigate on Power and Electricity, on Internet and Broadband, on Human Resources and Taxes and Duties, on Business Continuity Plans and on COVID-19 measures, on Managerial competencies and on Corruption and Transparency. We fnally investigate also on Negative Perception, on Access to Information and on the Support of Governments to SMEs. Throughout our investigations, it was of prime importance to understand the impact that the COVID-19 created on these areas and how it materialized. We also gave special focus on the SMEs informal sector and on women.
The model is composed of 3 main integrated components:
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Figure 1.1: Rollo Pilot Phase
Rollo Africa Inc: Rollo Africa Inc is a virtual simulated African company hosted in Cesim platform. The online business simulation software can host up to 12 SMEs competing in the same environment. Each enterprise is composed of 3 participants who manage a manufacturing company in local and international markets. The team is responsible for developing and executing strategies and decisions for their virtual company while taking into consideration customer behavior, cost structures and currency fuctuations in the diferent markets. Decisions to be made relate to promotion, pricing, quality control across products and customer segments, production and location cost advantages, investment appraisal, capital vs. labor assessment, fnancing decisions, demand estimations and budgeting. African enterprises: A total number of 120 enterprises composed of 360 African participants are selected to perform in the simulation divided in 10 online local bootcamps. These participants have the chance to practice and test new business strategies and ideas that can help them to protect their businesses during diverse and fuctuating market contexts. Showcasing and awareness: Mapping local African businesses and success stories is central to the program model. Rollo seeks to identify local enterprises and give them opportunities to highlight their businesses while learning from local success stories, best practices and knowledge. The most successful participants had the opportunity to advance to Rollo Masters where they presented their business strategy in the simulation and related to the real market in front of African and international businesses judges, stakeholders, and policy makers. In addition, the outcomes and ideas that emerge from Rollo program will serve as evidence-based policy guidance for impactful stimulus packages for SMEs, including but not limited to: - Capacity building for 360 African Entrepreneurs in 5 countries from the 5 regions of Africa. - Reduce the impact of the pandemic in small businesses across the continent. - Monitoring SMEs’ behavior during COVID19 (current and post) scenarios.
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- Collecting Data and information related to Local SMEs behaviors. - Disseminate lessons learned and good practices within Governments, non-state actors, businesses etc. - Build capacity of Afrilabs hubs by training 10 local trainers to facilitate the business simulation in their countries.
The program process includes:
- Call for application: Eligible African enterprises can apply online for the program. - Selection phase: In each country, Rollo selects 24 eligible teams (72 participants). - Rollo Associates: In each country, Rollo conducts 2 bootcamps. Top Entreprises will then advance to Rollo Masters. - Rollo Masters: The top performing 10 SMEs advance to Rollo’s fnal event, Rollo Masters, in which they will present their virtual strategies and ideas and compare these with real business models, demonstrating how African SMEs can use these tools for future growth.
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Part 1: Rollo Africa Business Simulation
Rollo pilot started in August after designing the program. In September, we trained the local implementing hubs. The recruitment started in October followed by interviews and shortlisting in November. The implementation of phase 1 was in December followed by phase 2 in January 2021 as the following: 1- Campaign and applications The recruitment started with an online application form that was available for candidates in dual languages: English and French in the time period from 15 October 2020 till 10 November 2020. We had a total of 15,000 total pageviews and engagement coming from diferent social media platforms, emails, SMS, instant messaging, and word of mouth. We received 1470 applicants /490 teams from 5 countries presenting the 5 diferent regions divided as follows: Cameroon, Egypt, Zimbabwe, Senegal and Sudan.
Figure 1.2: Campaign and recruitment
Each local implementing partner has designed diferent communications and recruitment strategies for the 3-4 weeks with a clear head start from Zimbabwe indicating avidity in such programs for SMEs. Egyptian businesses showed less interest compared to the other countries as Egypt might be more saturated with SMEs and Startups support programs. Other enterprises outside the 5 pilot countries showed interest like Nigeria, Kenya, South Africa and Ghana. Generally, we had 36,3% applications from Zimbabwe, followed by Sudan 19,6%, 17,1% Cameroon, 15,9% from Senegal and 11% from Egypt.
2- Team structure and diversity
African businesses who applied showed wide diverse profles, backgrounds and stages to address the simulation requirements as the following:
- 297 (60%) formal businesses applied against 193 (40%) Non-formal businesses.
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- 3.5 average years of operation per company. - 50% of the applied companies have operated for 2 years. - The average number of employees per business is 8 employees. - 392 (80%) of businesses employ full time employees. - 348 (71%) of businesses employ part time employees. - 324 (66%) of businesses employ women in their team. - 133 (27%) of businesses outsource some of their work to third parties. - 178 (36%) hire consultants and freelancers. - 86 (17%) of applicants employ historically marginalized communities. - 67 (13%) of businesses have disable people within their team members. - 58 (12%) of businesses have African Diaspora within their team. - The 490 enterprises employ around 3662 employees. 3- Shortlisting and Interviews
We shortlisted the 490 business to 120 businesses (360 participants) to be distributed over 10 local bootcamps. The shortlisted was based on the following 7 criteria:
Scoring Matrix
Description
Weight
1- Business Case Project Idea
10%
Relativity to the Simulated case
20%
Business stage
15%
2- Team
Financial Awareness
15%
Background and capacity
20%
Diversity (Diaspora, women.. etc)
15%
3- Covid Impact
Positively/Negatively
5%
Table 1.1: Shortlisting Criteria
4- Implementation and simulation results:
In December 2020 and January 2021, We implemented 2 simulation boot camps in each country. Thus, we divided the 120 businesses to 10 diferent bootcamps. Each boot camp hosts 36 participants from 12 businesses. Participants were asked to manage a manufacturing company (Rollo Inc) which produces 2 diferent products and sell it in three diferent market areas: Africa, USA, France. Each team competes with the other teams in the same business environment for 6 rounds. Each round represents one fnancial year in real life.
The following represent the results and the relative performance of the selected mSMES in their respective bootcamps:
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1. Egypt Simulation
Egypt Simulation (Bootcamp A: 20-21-22 December 2020)
Overall Score: 103%
Business Sector
Industrial - Agribusiness - Food - Environmental - Printing industry - Renewable energy - Fabrics & Garments - Cosmetic - Legal Services - Medical Services
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.2: Egypt Simulation A
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Egypt Simulation ( Bootcamp B: 7-8-9 January 2021)
Overall Score: 93%
Business Sector
Agriculture - Food - Hand crafts - Trading - Textile and Garments - Services - Industrial
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.3: Egypt Simulation B
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2. Sudan Simulation
Sudan Simulation ( Bootcamp A: 17-18-19 December 2020)
Overall Score: 95%
Business Sector
Recruitment - Produce and food - Manufacturing - Finance - Agriculture - Tourism - Retail - Healthcare - Manufacturing and retail - Logistics
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.4: Sudan Simulation A
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Sudan Simulation ( Bootcamp B: 16-17-18 January 2021)
Overall Score 96%
Business Sector
Social Enterprise - Cosmetic - Agriculture - Manufacturing and packaging Information technology (IT) - Solar - Finance - Textile - Media production - Game design
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.5: Sudan Simulation B
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3. Senegal Simulation
Senegal Simulation ( Bootcamp A: 2-3-4 December 2020)
Overall Score: 89%
Business Sector
Digital - Agribusiness - Poultry farming - IT - Environnement - Garments - Cosmetics - Laws Jurisdiction - Administration - Media - Retail - Entrepreneurial coaching
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.6: Senegal Simulation A
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Senegal Simulation ( Bootcamp B: 13-14-15 January 2021)
Overall Score: 91%
Business Sector
Agriculture - Digital - Finance/Insurance - Services - Job creation - Community research - Digital marketing - Online restaurant - Agri business
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.7: Senegal Simulation B
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4. Cameroon Simulation
Cameroon Simulation ( Bootcamp A: 09-10-11 December 2020)
Overall Score 88%
Business Sector
IT (Healthcare Application) - Flower cultivation and sales - IT (e-learning platform) - Manufacturing - Custom Brokerage Services - Manufacturing (Recycling)
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.8: Cameroon Simulation A
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Cameroon Simulation ( Bootcamp B: 20-21-22 January 2021)
Overall Score: 86%
Business Sector
IT (Glocalization & Security App) - Consulting Services - E-Commerce - IT (FinTech Application) - Recycling - Services - Food Processing
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.9: Cameroon Simulation B
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5. Zimbabwe Simulation
Zimbabwe Simulation ( Bootcamp A: 14-15-16 December 2020)
Overall score: 89&
Business Sector
Energy - Agriculture - Processing - Transport - Agriculture - Education - Financial Services - Manufacturing - Retail
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.10: Zimbabwe Simulation A
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Zimbabwe Simulation ( Bootcamp B: 07-08-09 January 2021)
Overall Score: 87%
Business Sector
Digital Marketing - Agriculture - Service - Packaging - Processing - Service - IT - Tourism
Global Sales Revenue
Cumulative Earnings - 6 Financial years
Final Sorting and Performance
Table 1.11: Zimbabwe Simulation B
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We ranked all the SMEs based on their cumulatives earnings in the simulator. However, the selection for Rollo Africa Master involved the fnal presentation. The best Boot camp in terms of the fnal total score was in Egypt Bootcamp-A which scored 103% and the least was in Cameroon in bootcamp-B which scored 86%. Sudanese participants and businesses showed high discipline and commitment. Francophone speaking countries made more efort and Exousia from Senegal was the best in Rollo Master. While, Agrona from Egypt achieved the highest score in the local bootcamp with 115%. Seven out of the ten top companies were service based companies. 50% of the companies advanced to Rollo Africa Masters are from Agribusiness and sustainability related businesses. Products and manufacturing based companies performed the least.
6. Rollo Africa Master
In Rollo Master, we selected only the best performing business in each boot camp in terms of cumulative earnings and their presentation in front of local business judges and asked them to compete in diferent business environments (Service not Product based like in local simulation). The 10 top teams asked to run a hotel in the domestic and international markets and we monitored their behaviors and results in 6 diferent market outlooks and seasons. The competition was really intense till the last round and it is worth mentioning that all teams achieved positive cumulative shareholders returns which is very rare to happen in the simulation. This is also a good proof that top SMEs in Africa can be very attractive for investment and investors. The champion of Rollo Master Exousia from Senegal was a great example of how informal businesses and women led businesses can compete and achieve excellent results if they compete in a well structured and fair environment. It is important to also highlight that the program had around 35% women led business and it was almost the same percentage we had in the fnal Master event. This is concrete proof that women's led businesses can perform as men in a fair environment. 80% of the informal businesses decided to drop-of from the simulator and were replaced organically by the local hubs with formal businesses. The informal sector is not ready and/or not willing to be in a well structured environment. However, we had 2 informal businesses represented in the top 10 companies. (Exousia from Senegal and IVS from Sudan)
Rollo Africa Master Simulation
Egypt - Sudan - Senegal - Cameroon - Zimbabwe (29-30-31 January 2021)
Income Statement
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Balance Sheet
Market report - Domestic
Market report - International
Operation report - Domestic
Operation report- International
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Quality level and Personnel stress level - domestic
Quality level and Personnel stress level - International
Cumulative Shareholders return %, Pa.
Market Value of Share - Euros
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Final Sorting and performance - Round 6 - Year 3
Table 1.12: Rollo Master Performance
5- African SMEs Modeling After the implementation phase, we compared the results extracted from each country with a huge amount of data from previous participants' decisions and results to understand the local performance compared to the global trends. Egypt performed the best followed by Sudan, Senegal, Zimbabwe and Cameroon.
Phase 1 Bootcamp A
Phase 2 Bootcamp B
Average Competitiveness Level
Rollo Ranking 2020
Egypt
103%
93%
98%
1
Sudan
95%
96%
95.5%
2
Senegal
89%
91%
90%
3
Zimbabwe
88%
87%
87.5%
4
Cameroon
88%
86%
87%
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Table 1.13: Scorecards per country
A score of 100 would refect that the country/team performs inline with the benchmark. The benchmark is set by accumulation of previous participants inputs/decisions from all over the world. Above 100 refects superior performance to benchmark, below 100 indicates less than adequate performance relative to benchmark.
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Figure 1.3: Scorecards Map
The CESIM scorecard was custom developed by our partner to portray the Entrepreneurial capabilities of the participating teams. Specifcally, it measures along the decision-making processes of each team throughout the 6 rounds of the simulation 8 entrepreneurial capabilities.These 8 capabilities are traced through a variety of decisions made by the team. They are scored against a huge CESIM-held dataset that serves as a benchmark. They are enumerated hereafter, and we can track their sub-set of related simulation decisions. Entrepreneurial Capability Subset of related Decisions
● Core business (90% weight) ● Priority customers (10% weight)
1- Pricing
● Demand ● Market share ● Efciency ● Inventory bufer
2- Forecasting/ Setting fnancial Goals
● Production allocation ● Investment plausibility ● Debt management ● Cash management ● Customer care ● Advertising ● Quality investments ● Efciency investment ● Production management ● Production prioritization ● Logistic prioritization ● Inventory management ● Interest rate management
3- Asset Management
4- Financing
5- Budgeting/Marketing Efectiveness
6- Cost Management
7- Logistics Management
8- Risk Management
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Table 1.14: Score Cards Description
The following ScoreCards table indicates the performance of each capability: Ranking 1: Egypt - 98%
Bootcamp A (103%)
Bootcamp B (93%)
Ranking 2: Sudan - 95,5%
Bootcamp A (95%)
Bootcamp B (96%)
Ranking 3: Senegal -90%
Bootcamp A (89%)
Bootcamp B (91%)
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Ranking 4: Zimbabwe - 87.5%
Bootcamp A (88%)
Bootcamp B (87%)
Ranking 5: Cameroon - 88%
Bootcamp A (88%)
Bootcamp B (86%)
Table 1.15: Countries ScoreCards 6- African SMEs Strengths and Weaknesses
The data extracted prove that local SMEs have diferent behaviors based on their countries. Generally, African Businesses performed very well in decisions related to budgeting, distributing money, and managing risk associated with their businesses. Egyptian and Sudanese businesses showed very good understanding of fnance and accounting. This was not the case for businesses located in countries in SSA like Senegal, Zimbabwe and Cameroon who had challenges setting their pricing, fnancial goals and forecasting. Overall, the decisions taken by all the African participants during the overall simulation in the 5 countries indicates that average relative success of those decisions is 92%. The average score range in the simulator is between 70% to 110%. While 100% represents the benchmark of similar cases. The following relative score can help map future collaboration opportunities between SMEs in Africa and can help governments create regional partnerships based on real strength and opportunities.
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Egypt
Sudan Senegal Zimbabwe Cameroon AVG
Pricing
87% 91% 82% 74% 78% 82%
Forecasting
94% 88% 79% 74% 79% 83%
Logistics Management
91% 93% 89% 90% 81% 89%
Financing
95% 97% 88% 92% 84% 91%
Cost Management
96% 89% 94% 87% 93% 92%
Asset Management 99% 98% 97% 90% 91% 95% Risk Management 108% 98% 92% 92% 95% 97% Budgeting 115% 110% 102% 101% 98% 105% AVG 98% 95% 90% 87.5% 87% 91.5%
Table 1.16: Strength and weakness of African SMEs
7- Performance of the Informal businesses
During the simulation, we tried to monitor the performance of the informal businesses. We imposed a quota of 30% of informal businesses in each of the local boot camps to monitor their behavior competing with other formal businesses in the same business environment. 80% of those businesses dropped of from the simulation before or during the frst day. Our local partners replaced the drop of business with other formal businesses to ensure that the commitment. Meanwhile, other informal businesses performed really well like Excousia from Senegal who ended up frst of the frst local bootcamp and Rollo Master.
8- Performance of Women-led businesses
Women-led businesses performed great in the simulation. We imposed a minimum 30% of women led-businesses in the shortlisting in all bootcamps. During Rollo Master, we ended up with 40% women led-businesses in the top 10 companies. This is a great proof that women lead businesses have the same/better managerial level and performance as men-led businesses if they work in a fair business environment.
9- Performance of African Diaspora
More than 20% of the selected businesses indicated the presence of diaspora in their team members. However, no one from those teams ended up in the fnal top 10 companies. In parallel, 4 out the 5 local implemented partners founded by diaspora. This is an interesting fact about the current role of African Diaspora who play an important role in the Entrepreneurship Supporting Organizations ESO.
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Part 2: African Businesses Analysis
This part highlights African business analysis through a parallel survey project. The surveys were administered during the 10 Bootcamps. Each bootcamp ran 2 surveys per day totaling 6 surveys per bootcamp. The following table details the surveys topics and their distribution over the bootcamp days. Depending on the survey’s length it was grouped with other survey topic(s) in order to level out the fatigue level per survey. The surveys were administered in English for English speaking SMEs and in French for French speaking SMEs. It is envisaged that the surveys will be translated in Arabic for encompassing the language barrier for non-English/French speakers amongst future participating African SMEs.
Bootcamp Survey
Topics
Survey 1
- Access to Finance
Day 1
- Electricity & Power. - Internet usage, bandwidth and stability - Cybersecurity and security of digital tools
Survey 2
Survey 3
- Human resources - Taxes and government duties - Business continuity plans
Day 2
Survey 4
- Lockdown - Access to health and safety information & services
Survey 5
Day 3
- Negative Perception - Access to reliable information - Government Support
Survey 6
Table 2.1: Survey Topics
Methodology The research project associated with Rollo Africa 2020 Program was coupled with the need to understand which challenges the African SMEs were facing and how did these challenges evolve with the COVID-19 pandemic. For this purpose, a literature review was conducted to assemble typical challenges faced by African SMEs. Meanwhile, a comprehensive survey tool was developed with the help of the literature tracking these challenges, trying to verify which of these challenges remained a topical challenge and which did not. Also, the survey tool tries to uncover how African SMEs faced these challenges during the COVID-19 pandemic.
We hereafter, explain the nature of each of these identifed challenges:
● Electricity and Power Supply: Electricity has been reported to be by far the most important obstacle that most businesses in the Sub-Saharan Africa experience when operating and developing their business. Management of energy is signifcant to provide quantitative results and comprehensive information about how and where the energy use afects economic growth and development. This information is necessary to enable African governments to respond promptly with measures that will improve the supply of energy to ensure the proftability and competitiveness of frms. The objective of this paper is to analyse the efect of electric power fuctuations on the proftability and competitiveness of SMEs. ● Access to Financing: The availability of external fnance has been positively associated with the number of startups, an important indicator of entrepreneurship as well as with frm dynamism and innovation. According to research, it appears that access to fnancing is
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pronounced in African countries and for the SMEs in particular. Hence, in our study we attempt to track this challenge for participating SMEs. ● Poor Management: This arises from the fact that most African SMEs operators or their managers lack managerial expertise, mainly arising from the shortage of professional training and experience. The management style is based primarily on trial and error and driven by performance and short-term gains. This problem is even more acute at the top levels of African SMEs. ● Negative Perception: Another challenge facing SMEs is the negative perception potential customers are predisposed with. The businesses are perceived to be unable to provide required quality products and services compared to larger organizations. African SMEs are typically competing with larger companies in the marketplace maintaining well-known names, brands and reputation. Hence, these SMEs have to have strong competitive advantages and strategies allowing them to stand the pressure from existing competitions and to win loyal customers. ● Competency and Capability: This denotes business owner and managers’ knowledge, skills and experience. Unfortunately, numerous studies have recognized low human resources capabilities and competencies as major challenges facing SMEs in Africa. ● Access to Reliable Information: Another challenge faced by SMEs in Africa is lack of adequate business information from both governments and service providers. The problem arises from poor information environment resulting from underdeveloped technological and communication infrastructures and inadequate business support systems ● Government Support: The role of the government in facilitating and supporting SMEs remains critical worldwide. A government that does not support SMEs does not only hurt the sector but experiences negative growth in its economic development. The environment created by the government in terms of wages framework, taxation, licensing, opportunities, technological support and infrastructure pave the road to success or failure for the SMEs. Depending on the regulatory frameworks put in place by the government, can easily crush or promote small business economy ● Corruption: Due to corruption and red tape, many SMEs fnd it more proftable to stay in the informal sector, and by that avoiding heavy taxation and other burdensome regulations. However, growth opportunities in the informal sector are seriously hampered by reduced access to formal credit, lack of possible expansion out of local markets, etc.
We then supplemented these literature’s identifed challenges with challenges we identifed from texts/articles published during the COVID-19 pandemic highlighting some recent surfacing and/or introduced SME challenges that are closely related to the pandemic.
We hereby describe the nature of these challenges
● Human Resources related issues: It was reported that many companies resorted to laying of some of its personnel in reaction to economic uncertainty. How did these phenomena materialize? Were the layofs a common trend among African SMEs as well? Some African SMEs resorted to temporary layofs as a personnel reduction strategy? Whom did these job cuts afect the most? In particular, we look closely at the impact it had on women and minorities.When companies It was also reported that many companies were managing personnel diferently with teleworking setting itself as a common working practice. How did this teleworking get organized and controlled? Also, we are interested in learning how the diferent African SMEs manage their employee leaves? And we track the productivity of those SMEs pre-post the health crisis.
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● Education Discontinuity: Many young children had to stay home during the pandemic lockdown. How did the working parents manage this situation along with their work obligations? If these children had to follow school from home, what was the impact on time consecrated to work obligations and helping children with their assignments and education? On another side, how did the families manage shared technological resources such as laptops, PCs and tablets? ● Training and Professional Development: Human Resource consultants strongly advised that the pandemic period is the best period to conduct training and to bring to level the competencies and capabilities of the company employees. Specifcally, digital skills seemed to become important to master for corporations to be able to adapt to the new pandemic imperative. Was this phenomenon also true for African SMEs? How did it manifest itself? What were the trends regarding Training and Professional Development? ● Lack of consistency / clarity in confnement measures / hours of functioning / curfew / measures to be implemented to close down and to reopen etc. It was long dwelled on the many changes introduced by the governments to control the spreading of the virus during the COVID-19 pandemic. This involved many confnement measures that were controversial. Like closing down the restaurants and other retail shops, while keeping some other. During the Holy month of Ramadan, the confnement hours got extended to allow for families to gather during Iftar in Egypt. Similarly, measures implemented were announced and often changed shortly after. It seemed that governments were facing the pandemic (at least in its early stages) with a trial-and-error approach. Some of these measures were subject to lobbying from infuential business leaders to get loosened. In our surveys we try to track the reality that the lockdown and confnement measures have been created on African SMEs. ● Taxes and government duties: Many governments recurred to tax reliefs and economic stimulus to curb the downward efect of the COVID-19 pandemic. How far could African governments go into this pathway? What tools did the diferent African governments’ exactly use? Were there any specifc measures targeted towards SMEs? If yes, what was the magnitude of the impact of such measures? ● Lack of business continuity plans and guidance: The discovery of the critical role that Business Continuity Plans play during the health crisis was prominently put forward as one of the axes organizations should master. Resuming business operations and services as usual, as much as possible, is of critical importance too. It is imperative to continue servicing clients, minimize business interruption and halt possible negative impacts on the company’s bottom line. Through the survey tool we try to uncover whether the African SMEs were well equipped with Business Continuity Plans adapted for the Coronavirus outbreak situation. ● Access to health and safety information and services: Response activities to the COVID-19 pandemic typically included personal protection through physical distancing and hand washing coupled with respiratory precautions through face covering. Increased testing and screening with contact tracing are fundamental to transmission control, and this has been variably combined with “locking down” of public places including educational establishments, retail outlets, factories and ofces combined with closure of borders and quarantining suspected persons. As governments in developed countries were issuing workplace safety guidance and making information available, we wanted to learn about what happened with regards to African SMEs? What kind of information was made available? What kind of health services congruent with the pandemic was made available? And how did this beneft / hinder the SMEs from working during the COVID-19 outbreak. On another note, there are also concerns with the reliability of the data among some of the African countries due to limited detection capacity and reliable tests as well as under-reporting of both deaths and prevalence rates. There have been concerns with the reliability of testing equipment as well.
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Survey Builder
After developing the questionnaires around the diferent challenges, the questions were peer checked by a colleague from academia and by experts from UNDP and African Union to test their validity and comprehension. They were then translated in French. The surveys were built using the Alchemer tool www.alchemer.com (formerly SurveyGizmo). Alchemer is an online survey tool allowing to gather feedback from participating respondents in many formats. It allows piping (that is if the answer is X then follows path A, and if the answer is Y, the execute action B). It also has the capability of generating pre-fltered reports and statistics.
Responses
The following table details the respondents’ numbers across the 5 countries. It also presents how many completed responses per survey were collected.
Survey Egypt Sudan
1
2
3
4
5 6
66 62
42 57 36 60
45 52 51 44 57 57 55 57 38 33 37 34 48 35 53 34
Cameroon 49
Senegal
57 61
Zimbabwe 54 49 52 53 Completed 295 252 242 226 248 242 Partial 72 42 9 40 20 21 Table 2.2: Survey Respondents Numbers 57
The data used for analysis is the data collected from completed surveys, since it was reported that participants who encountered connectivity problems had to restart the survey in order to complete it and fulfll program participation requirements.
African SMEs Situation Analysis
In this part, we analyze the input from 360 participants from the 120 businesses, we have the following results:
1- Access to fnance
● Total number of respondents: 295
Need of fnance ● Number of companies that needed fnance over their own capital 259 (88,1%) ● businesses who needed fnancing needed an amount ranging between 5,000 US$ to 5,200,000 US$. Averaging a 669,381.2 US$ fnancing need with a standard deviation of 3,7 Million US$.
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Only 11.9% of businesses obtained fnance over their own capital. More than half of those who applied for a loan applied for it in the last three years (2018-2020). Out of those 35 who applied for a loan only 20 (57,1%) successfully obtained one. Out of the 20 who successfully obtained a loan, only 6 (30%) obtained a loan amount that corresponded to their request / need.
Figure 2.1: Need of Finance
This shows the critical challenge that African SMEs are facing with access to fnance. When only (6 out of 295) less than 2% of the total population can have access to fnancing with satisfying credit amounts, it means that this challenge is prominent among challenges facing startups in the African continent. Among the reasons mentioned for not being able to obtain a loan, it was mentioned:
- “The bank refused to commit itself”. - “Lack of collateral (mentioned several times) - No assets” - “Too expensive - The bank interest is very high” - “No reason (was communicated to us) - Not sure” - “Our cash Flow is not strong” - “(Our company is still) informel and not yet registered”
Conversely, some 74 from our respondents (25,2%) admitted applying for a personal loan intended to cover for their company fnancing needs.
Types of accounts In this section, we asked respondents which kind of account (personal and/or company) they used for their startup and for which reasons. The chart clearly indicates that only about half of the respondents already have a company account (55,10%), while 28,6% use only a personal account and some 11,90% use both types of accounts (personal and corporate) to manage their company fnances.
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Figure 2.2: Type of bank accounts
These replies clearly indicate that opening a company account is much more difcult than opening a personal account and that fees related to company accounts become discouraging for startups to pursue. On a lower scale, some respondents reported that obtaining a personal loan though their personal accounts is much easier than obtaining one through a company account.
Figure 2.3: Personal bank account in SMEs
For those who wrote in other some of the collected responses were:
- “We are preparing for having a business account”. - “Gain credit by fnancial check”. - “I'm in the process of opening a company account, the requirements for my own (personal account) were easier to fulfll”.
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