How Far has African Tech Startups come with Digitising SMEs

African tech startups have come a long way in digitising SMEs. This has helped in giving small businesses an increased access to a wider pool of prospective customers. 

However, about 90% of businesses on the continent are not yet digitised. According to the Nigerian Bureau of Statistics, Nigeria’s small and medium-sized firms contributed roughly 48% to the country’s GDP on average in the last five years. This validates the importance of small businesses in the country.

Less than half of the population on the continent have access to an internet connection, and just 24% shop online. African tech startups are rapidly digitising the pool of SMEs yet to provide their products and services online. Some of the startups developing digital products for SMEs across Africa are Kippa, Bumpa, Sendbox and Sabi which just recently closed a $6 million bridge round. The tech startup aims at expanding its B2B retail platform outside Nigeria. It will help bring non-digitizes SMEs online.

More on the African Tech Startup Sabi Funding

Sabi, a one-year-old spinoff from Rensource, an African energy firm that provides consumers with power-as-a-service, raised financing to serve the informal sector. The bridge round was led by pan-African VC firm CRE Ventures to revamp the startup from the harsh effects of the COVID-19 pandemic.

Sabi’s bridge investment comes a year after the company raised a $2 million seed round from CRE Ventures, Jaango Capital, Atlantica Ventures, and Waarde Capital.

Since its launch in 2015, Rensource has been led by Ademola Adesina and Anu Adasolum. Adesina serves as the founder and CEO, while Adasolum is the COO. With Rensource’s business halted by the epidemic, the team had time to explore the challenges facing SMEs, which became Sabi in October 2020.

Sabi is an attempt at platforming the informal sector and African trade through various online and offline approaches. This implies Sabi aims to enhance rather than replace the middlemen, mainly distributors in the B2B e-commerce retail chain, a model similar to that of other well-known B2B e-commerce retail businesses such as Sokowatch, and Twiga.

“We’re not trying to be, you know, a tech-enabled digital distributor. We’re not trying to disintermediate a market full of hyper-specialization where one of the defining characteristics of the informal sector is you have all these middlemen and agents performing a very narrow role”, Adesina said.

Sabi offers various channels, including offline agents, call centres, merchant partners, supplier centres, and mobile apps. Each stakeholder has access to tools for inventory management, sales, tracking, digital invoices, and analytics on the platform.

“We’re starting with what makes them comfortable, not what we think is best”, the CEO added. 

Pardon Makumbe, co-founder and managing partner at CRE Venture Capital, in a statement emphasised why his firm doubled down on its investment in less than a year.

“Sabi’s online and offline approach to serving informal businesses, combined with the quality of its platform and service provider curation, has clearly taken root in Nigeria. The company is on track to be one of the fastest-growing African companies of 2021 and is showing no signs of slowing down”, he said.  

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