Cloud computing can help SMEs beat supply upset
The global impact of Covid-19 pandemic on public health and business, cannot be underestimated.
Policy makers and stakeholders must, thus, consider the impact such global disruption poses especially to small and medium businesses (SMES).
Anticipating and mitigating for impact of unforeseen global events on supply chain management is crucial if SMEs, reliant on goods from an affected area, are to survive.
Due to their size and lack of resources, SMEs are often the most vulnerable to unforeseen events and threats.
They also often do not have a plan to deal with such disruptions. Yet, in Africa, SMEs are important drivers of economic growth, accounting for up to 90 per cent of businesses in sub-Saharan Africa, an SME Initiatives advisory by International Finance Corporation reports.
Regrettably, companies that would usually import items to sell, particularly SMEs, are unable to continue with business as usual.
So, the question we must ask is, how do these SMEs make their supply chain anti-fragile?
Digital commerce platforms and advances in fields like digital analytics and artificial intelligence can significantly help mitigate such risks.
Flexible cloud computing solutions, data collection and analysis and automation software can all contribute to SMEs success in the digital era.
Cloud computing also gives businesses the ability to scale, cost-effectively, to new markets and is particularly beneficial for SMEs, who often lacked resources or infrastructure to expand.
Partnerships with companies like Jumia in Kenya and Nigeria has, for instance, made Microsoft products available to SMEs in local currency.
The challenge now is to establish new supply chain avenues within Africa. The African Continental Free Trade Agreement can play the role of unlocking innovation, growth and productivity on the continent, especially for its SME segment, by translating spending power into economic development.
To date, intra-African trade is relatively limited. UNCTAD, the main UN body dealing with trade, said it made up only 10.2 per cent of the continent’s total trade in 2010.
Between 2010 and 2015, fuels represented more than half of Africa’s exports to non-African countries, while manufactured goods made up only 18 per cent.
By creating a single continental market for goods and services, the member states of the African Union hope to boost trade between African countries.
Some studies have shown this could increase intra-Africa trade by about 52 per cent by 2022, although these predictions will likely be revised downwards due to the pandemic.
Regardless, better market access creates economies of scale. Combined with appropriate industrial policies, this contributes to a diversified industrial sector and growth in manufacturing value added.
Digital platforms and the adoption of mobile technology give SMEs opportunities to access new markets, and to offer or identify goods and services previously limited by location constraints and marketing costs.
Start-ups such as CoinAfrique, based in Dakar, Senegal, provide access to markets for SMEs through a free classifieds platform for new and used products, allowing users to make money selling what they do not use and find bargains.
The app currently has over one million downloads – and the team are now looking to scale to 10 million active users across francophone Africa.
Other platforms, including Biz4Afrika, provide entrepreneurs and SMEs with access to valuable business information and resources, finance and markets.
Cash flow is always a challenge for SMEs, no more so than when trade is constrained due to external factors.
It’s always tricky for SMEs to balance working capital requirements with inventory availability.
The growth of the fintech sector effectively simplifies any transaction challenges by creating multiple payment channels.
Many fintech start-ups across Africa aim to promote access for SMEs to financing options previously unavailable to them, which also opens opportunities for trade on a larger scale.
As an example, Microsoft 4Afrika has partnered with African fintech start-ups, including Flutterwave in Nigeria and the MoVAS Group in East Africa, to open access to financing for SMEs.
Diversifying and strengthening supply chains is crucial for SMEs to survive and flourish.
When we consider that by 2035, the International Monetary Fund forecasts that Africa will have added more working age people to our workforce than the rest of the world’s regions combined, it’s essential we have a thriving SME sector to absorb these workers and help grow economies across the continent. — The writer is Head of Strategic Partnerships, Microsoft 4Afrika Initiative