In a report released by the United Nations Economic Commission for Africa (UNECA) in late August 2020, businesses in Africa reported three primary challenges as a result of the global lockdown – reduced opportunity to meet new customers, drop in demand for product and services, and lack of operational cash flow.
A deeper dive into the issues revealed that organisations whose primary business is related to goods reported a drop in demand as the key challenge while organisations who were focused on service delivery reported their pressing challenge to be the struggle to meet new customers. For the business owners and drivers in both categories, there seemed to be an unanimous agreement to the fact that Technology has been a game changer in navigating the shocks of this global lockdown. Technology helped businesses to adapt and there are a number of success stories that can be brought to bear.
Online Butchery is one – in 2018, the Ugandan entrepreneur founded Online Butchery, a website selling quality meat to hotels, restaurants and schools. In March 2020, those institutions locked down and orders dried up. Tony Ayebare, the owner of Butcher Online, was forced to start looking at the individual consumer market. It was an option that had been discussed in the past but not acted upon due to the estimation that it would take six months to put delivery systems in place. With business drying up though thanks to COVID-19, they put it into action in “a few days”. They bought some motorbikes and developed a prepaid meal plan. Although the loss of bulk orders was a blow – sales fell from 1 tonne a week to about 300-400kg during the lockdown – household purchases softened the impact.
Online Butchery’s story is a microcosm of how businesses in Africa are adapting to the pandemic. Consumers are changing their habits and companies are fast-tracking new ideas. In the short-run, the crisis will wipe out profits and sink some firms altogether, but in the long-run, it may yet serve to accelerate Africa’s economic transformation.
Businesses which seem to have adapted the most are those with the lightest physical footprints but who still faced challenges from their connection to physical infrastructure. For example, increased demand from household shoppers was impacted by the logistical challenges of reaching them through curfews and transport shutdowns.
An increasing number of business owners and drivers consider COVID-19 a turning point for their businesses with most in the curve applying a sense of optimism to adapting. However, many believe that while Technology was a key game changer, they are already looking forward to a robust economic recovery plan and for them, one potential driver keeps coming up – the African Continental Free Trade Area (AfCFTA).
COVID-19 served to expose long standing weaknesses, beaming a spotlight on a range of macroeconomic challenges that require much more than a quick fix and emergency funding from multilateral organisations. While the pandemic may have been bad for Africa and its economy, increasingly more people are beginning to view it as a potential catalyst for building a more sustainable, resilient and self-sufficient continent.
An article in African Business sums it appropriately; “arguably, the African Continental Free Trade Area (AfCFTA) is just the game-changer the continent needs right now. The agreement is a necessary but not exclusive factor in building economic resilience. Africa still exports raw materials and imports finished goods. Trade figures are largely padded with the intra-continental exports of finished goods from other regions.” Dianna Games – African Business
Africa, with the most arable land in the world, is still a net food importer. It is also a net importer of medicines used by millions of Africans – up to 90% of medicines consumed in sub-Saharan Africa are imported according to a 2019 McKinsey study. This despite the Pharmaceutical Manufacturing Plan for Africa which the African Union launched back in 2007.
The new trends emerging from the disruption caused by the pandemic must be factored into the continent’s economic recovery efforts as business owners and drivers adapt to new operational methods and as organisations adjust their business models out of necessity and opportunity.
COVID-19 is not just a crisis – it is our wake-up call for Africa where mismanagement and poor policy decisions span decades. A return to normal should not be an option. What is required is new, creative thinking about how to position the continent’s economy to face new realities and new risks.More Reads
- African Business Survey Results by UNECA
- Coronavirus: How African firms are adapting to the pandemic
- Is Your Organisation Ready?
- Industries without smokestacks: Constraints to growth
- How the African Union is Rallying to combat COVID-19
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