Sage, a global enterprise software provider, says red tape and a skills deficit are impeding African Small and Medium Enterprises (SMEs) from transforming digitally.

The company says that when providing services to African countries, it faces several challenges, including regulatory and policy barriers, legacy systems that are not easily compatible with modern, cloud-based solutions and a shortage of skills required to implement and manage human resources technologies.

"Navigating diverse regulatory environments can be complex, especially when different countries have varying rules regarding data protection, privacy, and digital transactions," says Gerhard Hartman, regional vice-president, medium business, Sage Africa and Middle East, in an interview with ITWeb Africa.

During the interview, Hartman shared some insights from Sage's recent market study, the Changing Face of HR Report Research Report, which was conducted in seven key countries: the United States, United Kingdom, Germany, Canada, Spain, France, and South Africa, and found that HR tech adoption rates in cloud HR are 46% for medium businesses and 40% for small businesses.

Regarding the rest of Africa, Hartman states that while SMEs in Botswana, Kenya, Namibia, and Nigeria are rapidly embracing advanced technology to better their operations; these problems make digital transformation difficult.

He explains: “SMEs in Botswana, Kenya, Namibia, and Nigeria are progressively adopting advanced technologies such as AI-powered tools, cloud-based HR solutions, and global HR systems.

“While the pace of adoption varies from country to country, the overall trend is clear - businesses are increasingly leveraging these technologies to drive growth, enhance operational efficiency, and make data-driven decisions. The primary reasons for adopting cloud-based HR solutions, often enhanced by AI, include: strategic planning to optimise operations.”

Also, he adds that the adoption of tech by the small business in these four African countries is mainly for “Improving efficiency through AI-enabled recruitment, employee management, gaining a competitive edge in their respective markets, enhancing customer service, supporting informed decision-making processes, and driving innovation within their organisations.”

For example, Hartman says: “We have clients in several African countries who have adopted our solutions like Sage 300 People to streamline their operations and drive strategic growth. This example illustrates a global trend where SMEs, regardless of location, are increasingly relying on technology to stay competitive and compliant.”