Meghan McCormick signed up for the Peace Corps shortly after graduating from Georgetown in 2011. In her second year as a PC volunteer, she worked to grow small businesses in Guinea by developing a business accelerator. Although there was initial difficulty getting local buy-in and challenges around political stability, the commitment of the youth to their community led to a successful 1-year pilot program. With these results, Meghan hoped the program would continue beyond its first anniversary and the end of her time as a PC volunteer, but events beyond her control conspired to make it seem unlikely: the Ebola epidemic led to an evacuation of her team and an eventual loss of funding for the project. Instead of accepting that the program she had built would be discontinued, Meghan re-launched the effort as an independent organization in Benin and worked day and night to make it a profitable, scalable social enterprise, eventually returning with its programming back to Guinea.
The resulting hybrid nonprofit and for-profit venture, Dare to Innovate (DTI), worked to support youth training on entrepreneurship and innovation with the goal to make the entrepreneurial ecosystem function more effectively as a whole. As the organization grew and found success in accelerating the number of startup businesses in her markets, Meghan encountered a different problem: how could she best support these new business owners cost-effectively and empower them to make their own decisions? She found that one of the key areas in which they were lacking insight was financial performance: if they tracked financial information at all, they entered it directly into paper ledgers, leading to siloed and often incomplete information — making effective, timely, data-driven decision making nearly impossible. Moreover, gaps in management knowledge were leading to inefficiencies in the day-to-day operations, hindering the ability of these small businesses to grow and scale. After nearly four years leading Dare to Innovate, Meghan decided a different approach was needed to address these new challenges: that’s when OZÉ, a for-profit venture, was spun out of the business.
One of the key areas in which they were lacking insight was financial performance: if they tracked financial information at all, they entered it directly into paper ledgers, leading to siloed and often incomplete information — making effective, timely, data-driven decision making nearly impossible.
With high smartphone penetration and the existing relationships Meghan had built, Ghana was the ideal initial pilot market for OZÉ, which solves the lack of management insight by giving entrepreneurs real-time information into the financial health of their business. Through its Beta app that launched two months ago, OZÉ is helping small and medium businesses (SMBs) make informed decisions through insight into basic cash flow — for example, it can expose products that are being sold at a loss and enable businesses to reoptimize inventory and product mix. The company’s freemium app allows users to log cash transactions and provides simple cash-flow insights to understand actual performance. By digitizing basic financial calculations and highlighting monthly cash balances, sales, and expenses on a basic dashboard, OZÉ is able to efficiently and cost-effectively support small business owners with a more complete understanding of their financial performance.
The need for solutions like OZÉ’s is clear: while SMBs have many growth challenges due to internal and external forces, one of the most pervasive hurdles to scaling appears to be the lack of the necessary skills to take the business one step further, be it becoming profitable enough to hire more workers or opening up a second location. A recent study, “Identifying Gazelles among Micro and Small Enterprises in Ghana”, found that a small business was unlikely to grow or create new jobs if an entrepreneur’s scores were low on a battery of measures that included non-verbal reasoning tests, numeracy tests, years of formal schooling, and financial literacy¹. While entrepreneurs in Ghana are often able to successfully run a small business, the increased requirements of running a larger business, with respect to managerial expertise and skills, including financial and cash-flow management, and complexity of expanding to international markets, proves to be too difficult to surmount utilizing business technologies of yesteryear — technologies such as paper ledgers, cash registers, and payroll-service companies. Addressing these key gaps with proven, easy-to-use tools can support the growth of SMBs across Africa.
OZÉ, however, is not the only startup working to make SMBs more efficient in Ghana — other low-cost enabling technologies are emerging to fill gaps in the capacity and knowledge of business owners, presenting a promising opportunity for investors to support the development and scale of these interventions. For example, PaySail is making employee management easier for SMBs through the automation and simplification of payroll and tax filings. Interpay is simplifying invoicing, billing, and fees through its electronic payment platform. Hubtel is enabling business owners with a dearth of sales experience to better engage customers by providing an integrated platform that includes a point-of-sales solution, customer messaging, and a customer-rewards program. By developing easy-to-use technology tools to fill knowledge gaps and provide low-cost solutions to improve the capacity of SMBs, these entrepreneurs are helping to ensure SMBs have the necessary capabilities to scale.
Considering SMBs represent over 90% of businesses and over 70% of Ghana’s GDP, it’s no wonder that these and other innovative solutions are being developed with this target market in mind². In addition, systematic trends, such as the increase in mobile penetration and high GDP growth rates, help to amplify the value that can be created through low-cost technical solutions to impact key sectors of Ghana’s economy. The government has taken note of this potential, implementing progressive strategies for inclusive and sustainable growth — just this past year the National Board for Small Scale Industries trained over 50,000 SMBs in business management³. By committing to capacity development, the efforts of the Ghanaian government in support of SMBs will drive additional investments into enabling technology to have a catalytic impact on these organizations.
While emerging technologies seem to present a panacea for the immediate growth challenges currently faced by SMBs, entrepreneurs and investors would be wise to also keep an eye out for innovative solutions to the next set of growth issues these companies are likely to face: namely, addressing the gap in access to working capital and to international markets.
As startups create more cost-effective technical solutions, the increase in mobile penetration in Ghana will amplify their ability to reach a wide array of users. Which of these technologies will succeed? Low barriers to entry for many technology businesses makes it paramount that the company is addressing a key challenge with a customer-centric solution. The success of this new crop of entrepreneurs supporting SMB growth will be inextricably intertwined with the success of the small businesses they serve. While emerging technologies seem to present a panacea for the immediate growth challenges currently faced by SMBs, entrepreneurs and investors would be wise to also keep an eye out for innovative solutions to the next set of growth issues these companies are likely to face: namely, addressing the gap in access to working capital and to international markets. A successful investment strategy in this thematic area will thus necessitate solving the near-term challenges these businesses face while developing solutions to overcome their next phase of growth obstacles on the horizon.
- Issues in SME Development in Ghana and South Africa. Abor, Joshua and Peter Quartey. International Resource Journal of Finance and Economics. Issue 39 (2010).
- Services Portal of the Government of Ghana.
- International Trade Centre. “SME Competitiveness in Ghana: Alliances for Action.” 2016.
- USAID, Ghana Economic Growth.