SMEs in the East African region are using digital transformation initiatives to increase their competitiveness and ensure they are set for growth despite challenging trading conditions.
According to Pedro Guerreiro, Managing Director: Central Africa at SAP, investments into new technologies will greatly assist SMEs in the region as they adapt to a very different operating environment.
“As one of the most important drivers for job creation and economic growth, the SME sector is vital to the region’s economic recovery. Technology will continue to play a determining role in how well the sector recovers from this year’s events, while also digitally-tooling organisations to out-perform their competitors in this new economy and enabling them to execute the business, operate, and thrive in the market.”
In 2017, SMEs accounted for 98% of all businesses in Kenya and created 30% of all jobs annually. According to the International Trade Centre, SMEs contributed 34% of Kenya’s GDP in 2016.
However, the impact of the coronavirus pandemic should not be underestimated: a recent Deloitte study found a 50% reduction in household and business spending, with direct consequences for the country’s SME sector.
“SMEs will need to reduce inefficiencies and improve decision-making to ensure they continue to survive – and thrive – despite our current challenges,” says Guerreiro. “In an encouraging sign, a growing number of East African SMEs are leveraging technology to improve business decision-making and drive greater efficiency across their operations.”
Guerreiro said that gaining granular insight into the financial and overall performance of the business is essential to the growth and survival of SMEs. “Business leaders can no longer make educated guesses about the performance of the business. You need certainty over the total performance of the business at all times, not weeks or months after the fact.”
For Kenyan candy manufacturer Mzuri Sweets, an over-reliance on spreadsheets and manual processing for reporting hampered the company’s growth efforts. The company employs 800 people and provides a range of confectionary goods to the Kenyan market.
After choosing SAP Business One and working with SAP implementation partner ACEteK, Mzuri Sweets now have a fully automated system that is accessible from web and mobile, enabling directors to make approvals from any location.
Ashika Modasia, Senior Accountant at Mzuri Sweets Ltd, says: “SAP Business One has united our company into one platform, bringing visibility to our management and allowing us to focus on growth.”
Stationery manufacturer Safari Stationers faced a similar issue. Its previous accounting system could not support the growth of a low margin, high volume business. Company management knew it needed a new system that could provide accurate monitoring and synchronise its operations.
Following the implementation of SAP Business One, Safari Stationers can monitor credit more easily, set up sales parameters to ensure only the correct number of orders are taken, while accessing richly detailed reports that have improved decision-making across the business. General Manager Deepti Vara said: “It’s been a smart and efficient journey with SAP Business One, and we are excited for the future.”
Guerreiro added: “Having systems and processes in place that automate back-office operations can also free up valuable internal resources, which can be deployed to high-value areas to support the SME’s growth.”
This was certainly the case for Mauritian engineering services firm Sotramon Limitée. With access to only basic accounting information and relying on manual processes, the company could not rely on its existing systems to support adequate stock taking, analysis or up to date information about the business.
ACEteK supported the company’s digital transformation with an SAP Business One implementation that sought to replace manual operations with automated processes that enabled easy access to up-to-date reports. Sotramon Chief Executive Officer Barbara Ah-Sue says: “SAP Business One has changed my life. It has given my business independence, accessibility and versatility.”
Guerreiro stated that there is great potential for further investment into new technologies that could help SMEs unlock new market opportunities. “Ultimately SMEs should strive to become Intelligent Enterprises that apply advanced technologies within integrated, agile business processes to turn insight into action.
As the sector expands its capabilities, SMEs will be better placed to sense opportunities, risks and trends, and take advantage of market opportunities.”
Catherine Ashine, Nairobi, Kenya