Index shows significant difference in effective tech use between female- and male-led SMEs

18th August 2023 By: Schalk Burger - Creamer Media Senior Deputy Editor

Index shows significant difference in effective tech use between female- and male-led SMEs

The inaugural South African SME Tech Index 2023 showed an overall level of 63.3%, which indicates that 63.3% of small, medium-sized and microenterprises (SMEs) in South Africa are making effective use of technology.

However, this also means that there is still a considerable way to go to empower small businesses to use technology to improve their competitiveness and resilience, market research company World Wide Worx CEO Arthur Goldstuck said in an August 17 briefing.

The research also showed a significant difference in effective technology use between SMEs led by women and those led by men, with 56.2% of women-led SMEs reporting effective or very effective use of technology, compared with 72.1% of SMEs led by men. This highlights a disparity in access to technology.

However, the research also found that 62.3% of women-led SMEs saw growth over the past 12 months, while only 51.9% of SMEs led by men saw growth over the same time.

“Female-led businesses have demonstrated higher competitiveness and adeptness in navigating challenges, contributing to their success and expansion,” Goldstuck said.

The research suggests that addressing the divide in technology use effectiveness across genders could help female-owned companies to boost their growth and competitiveness.

“The significant gender gap in the index highlights the need to address a digital divide between male- and female-led businesses. Efforts to bridge this gap are crucial for equitable business environments and economic growth,” he said.

Female-led SMEs have a lower perception of technology effectiveness than male-led SMEs. Disparities in technology adoption and investment potentially hinder their growth, with fewer female-led companies increasing technology investments, he added.

“This suggests that women in smaller businesses face barriers, such as limited resources, lack of training and societal norms, in leveraging technology. By addressing these barriers, through access to resources, training programmes and mentorship, the industry can help foster equal opportunities.

“It is clear from their overall competitiveness that such investment will reap dividends for the businesses as well as for the economy,” he emphasised.

Technology accounts for a sizeable portion of SMEs' expenses, with close to 56% spending more than 5% of their budget on information and communications technology and around 28% spending more than 10%.

The cost of technology infrastructure and services emerges as the primary challenge in technology adoption for both male- and female-led companies, with approximately half of them identifying it as a key obstacle, Goldstuck highlighted.

The South African SME Tech Index 2023 research and report, which surveyed 303 SMEs that employ between 1 to 100 people, was conducted by World Wide Worx on behalf of workspace solutions company Nashua.

“The index also provides granular information of the different needs of SMEs in provinces and industries that we will use to adapt our offerings to better suit the needs of our SME clients,” said Nashua chief marketing officer Yumna Ahmed.

“Additionally, over the next four weeks, we will host two workshops for female entrepreneurs and SME leaders in Mthatha and East London, which are areas that we are seeing strong growth in.

“Our responsibility as a business and our responsibility as an industry is to empower women-led businesses to more readily adopt and use technologies that will improve their businesses,” she said.

All of Nashua's franchises run client engagement programmes to inform them on how they can optimise their operations with technology available, but, from the research, it is clear that there is a need to educate and upskill women-led businesses, she added.

Meanwhile, the South African SME Tech Index 2023 research also paints a picture of a vibrant and resilient small business sector. Nine out of ten business owners report that their companies are competitive, while 58% say their business has grown over the past year and 85% expect to grow in the year to come.

“The small business sector is vital to job creation and economic growth in South Africa, and it is encouraging to see the research confirm that our SME sector is adaptable, optimistic and putting technology to effective use,” said Nashua CEO Barry Venter.

“However, it is also clear that many entrepreneurs, especially women, still face barriers to adoption of information and communications technology solutions.

“We are working with our franchises to empower business owners and decision-makers with insights and advice that removes barriers and helps them to future-proof their businesses,” he noted.