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How SMEs in Africa can save money and improve productivity

by Daisy Ndanyi

African economies are likely to continue being affected by increased inflation and the COVID-19 pandemic’s lasting impacts throughout 2023.

Small and medium-sized businesses (SMEs) all over the continent will need to keep on eye on cutting expenses and boosting efficiency in light of this. The good news is that there are numerous approaches to achieving these goals without sacrificing quality, growth or development.

Here are five actions SMEs can take.:


Fast track moving to the cloud 

Many of today’s SMEs rely on IT to manage almost every aspect of their operations, from production and transportation to customer support and back-office management. A impactful method to lower operational and capital costs is to move away from on-premises hardware and software. You can purchase IT hardware and software on a subscription basis rather than outright.

You will only pay for the capacity and services you require, avoiding large capital investments altogether. Without spending money on new gear, you may rapidly and effectively scale operations up and down. IT will change as you hire additional staff or expand your clientele. Additionally, you won’t need to manage an internal IT department.

Outsource non-core activities

Many SMEs find that they do not need to run a full finance, HR, IT marketing or payroll function. You can outsource non-core activities to specialised freelancers or consulting firms. By doing this, you can obtain top-notch services and abilities without having to hire an expensive full-time chartered accountant or IT manager. In some cases, you could even find professional services firms that operate on a monthly, or annual, subscription basis with costs tailored to your business’s size and needs.


Limit your expenditures

Even after most SMEs have cut some costs over the past three years, it’s a good idea to keep reviewing your day to day running  expenses. Make sure you are receiving favourable terms from service providers like your broadband and insurance firms and ensure you are not overspending on supplies like stationery and consumables. You can channel operational savings towards strengthening your value proposition. This increases your profitability, improves your competitiveness and helps you to grow.


Increase productivity via automation  

Investing in an integrated enterprise resource planning (ERP) system such as SAP Business One can help your business to gain more visibility into operational costs. This, in turn, can help you to optimise costs. Additionally, it will help you stay one step ahead of the competition and meet consumer demand. In addition, automating manual business processes via ERP can help you to run a leaner business that can grow without needing to add to overheads.


Optimise tax costs 

By ensuring that your company has optimised its tax obligation position, you could acieve cost savings. Whilst paying your taxes on time and adhering to good governance, make sure that you are claiming all deductions to which you are entitled and that you are making use of any subsidies or incentives available to you.  

By supplying security, availability, business continuity, productivity, and compliance, cloud-based ERP systems assist SMEs in lowering costs and increasing efficiency.

Daisy Ndanyi is the Head of Account Management at SEIDOR Africa


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