Technology Makes It Easier for SMEs to Do Business in Africa

November 19th, 2019 – The 2020 World Bank Doing Business report was recently released, and shows the overall business climate in sub-Saharan Africa is steadily improving. Looking at the ease of starting and maintaining a business, the region as a whole improved one percentage point over the last year, with a few standout countries. Mauritius and Rwanda rank among the top 20 countries globally, while Nigeria and Togo are among the top global improvers.

In the last year, countries across the region implemented 73 reforms, removing certain red tapes and obstacles for SMEs. While this is positive development, sub-Saharan Africa is still classified as a weak-performing region overall, with an average ease of doing business score of 51.8 – below the global average of 63.0.

Small businesses continue to battle with challenges including unreliable electricity, property registration, tax payment and debt management. But one trend is clear: As levels of internet access, technology adoption and digital innovation improve, so do many of these challenges.

The enabling power of technology

The use of online systems for tax filing, for instance, improved the ease of doing business scores in Côte d’Ivoire, Kenya, Mauritius and Togo. Nigeria also introduced the e-payment of trade fees, reducing the time to import and export, and an online platform for registering businesses, strengthening its ranking. Globally, markets that scored the highest in the report all have widespread use of electronic platforms.

Digital platforms are able to more quickly process and streamline administrative tasks, giving SMEs back precious time and money to focus on doing, and growing, business. Removing the burden of paperwork and long queues also has an incredible motivating factor. When the Kenya Copyright Board worked with Microsoft to develop an online, automated platform to help SMEs register intellectual property (IP), registrations increased by 100 percent. Additionally, one study found that the knock-on effect of increased IP registration is economies that are 26 per cent more competitive and twice as likely to produce and export complex, knowledge-intensive products.

SMEs are eager to adopt these digital services to improve their productivity. In South Africa, The State of Small Business report found that 78 per cent of small businesses surveyed choose accounting software to manage their financial records.

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Written by Allafrica