18 May
2021

Closing the Digital Divide will be Essential to South Africa’s Recovery


digital

Despite the challenges that businesses have faced over the last year, thousands of SMEs are making radical changes to their working models through digitisation

By Colin Timmis, Country Manager for Xero South Africa

One positive to come from this crisis is that it has compelled businesses to adopt more advanced technologies than they may otherwise have considered. Those that have been traditional at the core are now discovering that digital processes offer far greater scalability and resilience.

For example, the pandemic has hastened the use of contactless technology with traditionally cash-only shopkeepers and pushed many to grow their e-commerce services. Other ways of working like managing finances are also starting to be replaced with modern alternatives. Many businesses are replacing paper receipts and invoices with digital alternatives. Desktop financial software is being replaced by cloud tech for greater flexibility, and processes like VAT and tax are being streamlined with new tools.

We’re already seeing a sharp shift towards these new ways of working. Xero research shows a 50% increase in cloud adoption amongst SMEs over the last three years, and 70% want to adopt tech that helps remove repetitive manual tasks.

Looking more widely, we’re seeing tech adoption and new habits accelerate amongst consumers too – PayFast saw a 412% growth in QR code payments between March 2020 and February 2021, and there has been a sharp rise in e-commerce purchases during the pandemic.

Whilst Covid-19 has created a profound shift, there is still a long way to go. To survive and grow in the future, businesses will need to adapt to become increasingly digital at the core rather than at the edge.

The government has reiterated the importance of boosting digitisation, but many of its own processes still rely on traditional methods. It’s positive to see this starting to change in some areas. It recently committed a further R3 billion to fund the modernisation of SARS’ tech infrastructure.

SARS has already been innovating and collaborating with tech companies to digitise and simplify one of the most time-consuming processes for businesses, VAT returns. For example, we recently launched an eFiling beta with them, enabling businesses to directly file their VAT201 form electronically to SARS from Xero in just a few clicks.

Technology has the potential to transform the way South Africa’s SMEs do business and puts them in a position to grow. We already see its potential, but it’s just the tip of the iceberg. We need to see an urgent commitment to digitalisation from the government and the wider business community.

There are still tough times ahead, but we need to shift the conversation towards what we can do to support businesses and increase their productivity by closing the digital gap. Only then can we move forward to create new jobs and rebuild the economy.


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