The COVID-19 pandemic has caused a major demand shock for businesses around the world, especially micro, small and medium enterprises (MSMEs). MSMEs are among the the main drivers of economic development, innovation and employment but tend to have lower operating margins, which makes them vulnerable to shocks. In Ethiopia, where opportunities for women entrepreneurs lag far behind those for men, women-owned or headed MSMEs have been hit hard. This is evident in the Ethiopia Women’s Entrepreneurship Development Project (WEDP) – an IDA operation supporting more than 38,000 micro and small businesses run by women with business training and access to loans.
Since the creation of WEDP in 2012, participating companies have increased their revenues by 67% and employment in their companies has increased by 58%. WEDP companies employ nearly 90,000 people, 61% of whom are women. However, most of the businesses in WEDP are consumer oriented businesses such as grocery and clothing stores, cafes / restaurants and beauty salons. As the pandemic unfolded, their demand dropped dramatically, with 94% of companies seeing their sales decline year over year.
To strengthen WEDP’s activities and help protect the many jobs at risk, a joint team from the World Bank’s Gender Innovation Laboratory in Africa, the Finance, Competitiveness and Innovation consulting firm and the Technology Laboratory and Innovation ITS (ITSTI) came together to understand what types of digital solutions could support women entrepreneurs during the time of crisis. Out of this collaboration was born an innovative idea: a mobile application that could harness data from companies’ point of sale (POS) and generate business insights as well as transactional records, to help companies improve their operations, maximize their profits and get numerical results. credit scores to access emergency loans.
Based on preliminary research and consultations with WEDP entrepreneurs, ITSTI has developed a laboratory prototype for this application, which adapts the concepts of what an industry insider might call “enterprise software.” . The prototype uses emerging technologies and business analytics that a successful large retailer could use to optimize sales and operations, and adapts them to support small women-owned businesses in Ethiopia’s retail sector. The application is intended to be used on any smartphone, and starts by connecting via WiFi or via a connection cable to the contractors’ cash register. Ethiopian companies earning more than 100,000 ETB (3,000 USD) per year are required to use a cash register, so the tool is widely adoptable.
Once connected, the app will pull transaction data from the cash register to generate information on sales patterns, customer traffic, and high value products. The app would then provide targeted recommendations, such as “increase banana stock by 30% in June” to help entrepreneurs monitor and optimize their sales and income. The app would also allow businesses to interact remotely with their customers and corporate networks, enabling real-time price comparisons and incorporating elements of peer-to-peer exchange and learning, as well as access to financial service providers, all of which are essential in helping businesses adjust to social distancing and other health measures.
Together with the Ethiopian government’s SME agency, the next step is to present the prototype application in user testing sessions with WEDP entrepreneurs. These sessions will build on previous consultations with WEDP entrepreneurs to better understand what app features might be most desirable for women traders. Based on the feedback from the focus groups, a full enterprise software application will be developed and deployed as part of Operation WEDP over the coming months. Partnerships are underway with Ethiopian banks and microfinance institutions, as the app will create a digital record of company transactions that can be used as an alternative credit scoring medium for women-owned businesses that have need bridging capital to maintain or expand their operations during the crisis. .
The development of an enterprise software application for MSMEs in Ethiopia illustrates the positive steps the country has taken to promote digital development. As part of the new Digital Ethiopia 2025 strategy, the Ethiopian government is committed to investing in the research and development of emerging technologies, as well as creating an environment conducive to innovation to develop new businesses, services and jobs. These priorities find an echo in a Joint Action Plan and Call to Action for Digital Development initiated by the World Bank, the International Telecommunication Union (ITU), the GSMA and the World Economic Forum (WEF) in response to the COVID-19 crisis. Recognizing that digital technologies provide an opportunity for businesses to address social distancing, ensure business continuity and prevent downtime, the Joint Action Plan calls for new approaches such as exploiting big data and adaptive business models to support businesses affected by the crisis. As a contribution to this agenda, the World Bank team looks forward to sharing ideas and lessons for the design and deployment of digital solutions in partnership with public and private sector actors to support women-owned businesses.
The World Bank’s STI Technology and Innovation Lab made valuable contributions to this blog. To learn more about their work, contact: [email protected].