Digital transformation or digitisation is arguably the most important technological trend of our times, with an increasing amount of human activity (both personal and commercial) being conducted online.
In developed economies, this represents a continuation of a long-standing trend, and one that has only been accelerated by the move towards remote working due to the pandemic. The impact of digitisation can be seen in the profound social and policy changes it is enabling and causing, from the exponential growth of ecommerce to the gradual extinction of cash as a means of payment.
In developing countries, however, digitisation may well be starting from a low base, with many people (especially in rural areas) in danger of being left behind by infrastructure gaps and lack of connectivity to communications services.
Social entrepreneurship has already been identified as a means to alleviate poverty, improve social justice and promote transformation. It is proceeding in parallel with digitisation, which obliges us to ask important questions:

  • Is digitisation compatible with social entrepreneurship?
  • Can digitisation facilitate social entrepreneurship?
  • Is digitalisation a threat to social entrepreneurship?
Digitalisation and social entrepreneurship
Digitalisation means the replacement of physical goods and services with data-based (usually online) equivalents. Increasingly, access to goods and services is being delivered through apps on mobile devices, specifically smartphones.
Today, some 95% of South Africans own a mobile phone, with 91% of these devices being smartphones. The mobile penetration rate has been calculated as being 170% – this means that there are more mobile subscriptions than people, but this is due to many adults having multiple subscriptions (in part because of patchy coverage on competing networks).
Barriers to entry include high data and device costs (although more modestly priced devices are increasingly available) and the risk of device theft (despite their near-ubiquity, phones are frequently stolen in South Africa).
In Sub-Saharan Africa as a region, it has been estimated that some 475M people will have mobile internet access by 2025, with 27% of connections being to 4G networks and 3% to 5G networks.
However, Africa still lags behind the rest of the world when it comes to internet connectivity. In 2017, for example, only 22% of people in Africa were internet users, compared to 80% in Europe. These relatively low numbers do however mean that Africa offers the greatest potential for expansion of internet connectivity. The economic case for internet connectivity is clear – it has been estimated that for every 10% increase in mobile broadband penetration, GDP per capita increases by up to 0.7%. There is also clear urgency around the drive to connectivity – some 90% of all young people who lack internet access live in either Africa or Asia and the Pacific.
To create a skilled 21st Century workforce in Africa, internet connectivity is essential – but Africa still needs an estimated 500 000km of fibre optic cable to achieve full or almost full connectivity. That’s greater than the distance from the Earth to the Moon.
Multiple companies and governments are engaged in making this happen, and the rate of deployment is speeding up.
The link between digitalisation and social entrepreneurship
How can we dovetail this trend with our promotion of social entrepreneurship? Social entrepreneurship is about people combining their resources, skills and knowledge to improve situations for their families and communities.
Technology can assist in this process by overcoming obstacles such as distance, physical barriers like rivers or mountains, and weak or absent conventional infrastructure (although it must be noted that digitalisation itself relies on infrastructure improvements, specifically internet access via 5G or other means).
Digitalisation can offer shortcuts and cost savings to governments and enterprises. For example, installing mobile phone towers is a quicker and much cheaper than rolling out landline networks. These cost savings can be passed on to consumers and entrepreneurs.
It can also be used as a substitute for missing technology – payment apps can solve the issue of unbanked or underbanked consumers and can render the absence of ATMs and bank branches effectively irrelevant.
Digital transformation facilitates connections between people who may never have met each other. It can create bonds and trust and allows the transfer of valuable, intangible items (especially money and ideas) between people, businesses and communities.
Most importantly, in the context of social entrepreneurship, digital transformation enables digital businesses, or what is commonly referred to as e-trade. That is, business dealings where at least part of the transaction (typically the payment or exchange) takes place online, often (but not always) in conjunction with a physical transfer of a commodity.
Advantages of digitalisation
By removing barriers, digitalisation expands the window of possibilities for social entrepreneurs. It enables entrepreneurs to share ideas and inspiration and reach new audiences that may not previously have been accessible.
It can also reduce opportunities for criminals to prey on vulnerable small businesses – with no physical cash to steal, the proceeds of transactions are more secure. Social entrepreneurs using digital payment methods can also avoid bank charges, while people engaged in informal cross-border trade (ICBT) can similarly avoid the costs of exchanging currencies.
Existing businesses can pivot to digital models with relative ease (for example, taxi firms can use smartphone location services to plan better routes, and find passengers); equally, digitalisation makes new kinds of business possible at relatively low start-up costs.
During the pandemic, many people across Africa had to endure varying degrees of lockdown. Where they had access to digital services and connectivity, social entrepreneurs were still able to function, make money and be agents of change in their communities. Without connectivity, they may have struggled to achieve any of these things.
Connected social entrepreneurs can also more easily give back by acting as mentors. This is one of the key roles that social media can play: not only can it help businesspeople reach new customers, but it can also link social entrepreneurs with young people and students looking for inspiration and advice by nurturing online communities.
This is one of the main ways is which digitalisation is facilitating social entrepreneurship – not just as a functional mechanism, but by spreading the word about the potential benefits of social entrepreneurship, and information on advice in how to succeed in e-trade and other business endeavours.
Potential disadvantages of digitalisation
To some extent, digitalisation can be considered inevitable. If it has not already done so, it will soon reach a tipping point – that is, the point on the adoption bell curve beyond which only so-called ‘laggards’ will not be participating.
However, as noted, digital transformation is occurring at different speeds in different countries, due to multiple socio-economic factors. This raises the distinct possibility of some sectors of the population being left behind. Typically, these are likely to be lower-income people, those who are less familiar with technology (often the elderly), and those without network access (often more remote or rural communities). There may also be cultural reasons that militate against localised digitalisation such as a general mistrust of technology or a reluctance to share personal and/or financial information online.
This means that there is still a risk of ‘digital exclusion’ within otherwise connected communities.
By removing the need for interpersonal contact, e-trade could be considered to be detrimental to the fabric of society in that can eliminate regular personal interactions e.g. at marketplaces. This in turn can interrupt traditional mechanisms of information flow within societies.
Excessive reliance on technology can leave local economies vulnerable to disruption in the event of a loss of connectivity or services. Digitalisation can also facilitate anti-social or harmful behaviours such as increased spending or relative extravagance (the physical act of handing over cash has been shown to be a powerful deterrent to overspending versus ‘painless’ digital transactions).
Digitalisation can also expose people who may be technological ‘novices’ to an increased risk of fraud and cybercrime, while it can also be a tool used for exploitation of weaker or more vulnerable people in communities.
While the potential disadvantages of digitalisation in the context of social entrepreneurship cannot be denied, it is clear that on balance, digital transformation offers easier routes to social entrepreneurship success and positive transformation through enabling e-trade, and as such, it must be given a qualified welcome, and its promotion should become a key component of the social entrepreneurship agenda.