By Dorothy Ngwira, managing partner for Graham Carr, the Malawi member firm of international accountancy network Nexia International, and a member of the SMP Committee of IFAC
There can be little doubt that SMPs are a growing and increasingly significant force in Africa’s economic future. With demand growing for accountancy, advisory and tax services from the continent’s burgeoning small business sector, together with new investors who need additional levels of assurance, today’s SMPs in Africa face great opportunities. But there will be challenges along the way as well.
In Malawi in recent years we have seen the number of SMPs double. Employing the majority of accountants working in practice, these SMPs provide a broad range of professional services, such as traditional audit, accounting and tax services. But they also provide value-adding business advice to clients.
These clients, typically SMEs, are critically important to the health and stability of the global economy, accounting for the majority of private sector GDP, employment and growth. But they face challenges as well – according to a recent IFAC survey challenges in Africa include the burden of regulation, economic uncertainty and difficulties accessing finance. So who is best placed to help them? Accountants in SMPs.
However, these SMPs face their own challenges. In the same survey, African SMPs cite keeping up with new regulations and standards, attracting and retaining clients, and a pressure to lower fees as the top three challenges. And in the future, the biggest concern will be the reputation of the profession, alongside the difficult global financial climate and increased regulation.
Technology and communications can also prove difficult to access. In a global economy, businesses expect to be able to contact their advisers easily. This often proves the opposite, though investment on the ground is improving this.
But as SMPs overcome these challenges, they can see a world of opportunity ahead of them. The services they can offer their clients will grow and evolve. The IFAC study shows that while audit and assurance remain the fastest-growing services offered by SMPs, advisory and consultancy services come a close second.
For instance, offering sustainability services to SMEs is proving a rich seam for firms. SMPs will also have the opportunity to merge with similar-sized practices and compete with larger firms. Economies of scale will also come as a result of such mergers.
SMPs can support their SME clients when they do business internationally. Often joining an international network of accountancy firms can enhance this. And through such membership they can benefit from work referred to them from clients based in other countries.
I sense a growing optimism among SMPs in Africa. Last year 42% reported their performance was better than the year before, while on 22% said it had been worse. Some 44% believe that 2013 will prove to be better than 2012, and only 14% believe it will be worse.
The challenges faced by SMPs mainly arise from limited in-house resources, but they can turn to their professional body (in my case, ACCA and the Society of Accountants in Malawi) or IFAC through its SMP Committee for much-needed help and advice. The resources are there, and can be used to ensure that Africa’s SMEs get the services they deserve to compete on the global stage in the future.
To find our more read Access to finance for SMEs: a global agenda.
This article first appeared in Accounting and Business magazine small business special edition, May edition, 2013.