Accelerate digital transformation in SMEs to lift growth
The digitisation of small businesses supports the growth of the economy, given the important role they play in the wider economic picture. PHOTO | POOL
The digitisation of small businesses supports the growth of the economy, given the important role they play in the wider economic picture.
Micro Small and Medium enterprises (MSMEs) make a substantial contribution to livelihoods and inclusive growth in Kenya.
They account for 24 per cent of the country’s gross domestic product (GDP), more than 90 per cent of private sector enterprises and 93 per cent of the total labour force in the economy.
Due to their huge contribution to the national economy, there is a need to support small enterprises in competitiveness, business performance, and growth.
The government needs to enhance the implementation of e-commerce and the digital economy for the benefit of these small businesses.
Digitisation can help businesses to reduce operational costs, improve productivity, expand to new markets and customers, and use the information to foster innovation.
Digital payment solutions have greatly revolutionised business processes.
The global growth in e-commerce has been fuelled by a rise in reliable, secure and affordable digital payment services, as well as strong social media adoption and diversification of marketing channels.
SMEs are increasingly using social media to push their products and in response to this trend, financial players providing payment solutions that allow SMEs to collect payments by card without having to maintain a website.
The growth potential for e-commerce is also evidenced by the number and size of new players on the market who provide e-commerce solutions for both merchants and consumers.
SMEs do not have to invest in developing expensive e-commerce sites as they can leverage shopping carts provided by local and international players.
Despite digital transformation being a challenge, it is a competitive advantage for organisations during business disruptions.
For example, the Covid-19 pandemic accelerated the digital transformation process and added urgency for Governments to respond to a widening gap in digital readiness.
The Government of Kenya is putting in place an e-commerce strategy to propel growth in trade and businesses, which will enable the country to reap maximum benefits in the sector.
On the one hand, Kenya has moved fast to embrace communication technology, while on the other, it is yet to aggressively steer its markets towards adopting e-commerce.
The United Nations Conference on Trade and Development (UNCTAD) ranks Kenya 88th out of 152 countries in its e-commerce Index of 2020.
A key barrier to the widespread growth of e-commerce is limited access to low-cost digital payment solutions. Mobile transactions have been rising.
According to the Central Bank, Kenya has more than 70 million registered mobile money accounts cashing out more than Sh600 billion in August 2022 — and climbing. With just more than Sh51 billion in card payments in the same month, there is massive room for growth.
For SMEs to continue being the engine of inclusive growth, we need to refocus our SME development strategies to put digitisation at the centre of economic reforms.
Michael Mwangi, Head of Digital Business I&M Bank Ltd
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
