Procurement Challenges for SMEs: Practical Solutions to Cut Costs and Grow

Discover innovative solutions to lower costs, enhance efficiency, and drive sustainable growth.

Let’s be honest. For most small business owners in Africa, “procurement” isn’t a fancy corporate term; it’s the daily headache of finding a supplier who won’t ghost you, the shock of a shipping quote that costs more than the goods, and the nightmare of having your products stuck at customs while your customers grow impatient. These aren’t minor frustrations; they are real threats to your survival and growth.

However, after speaking with successful SME owners across the continent, we’ve learned that these problems aren’t a life sentence. In fact, they cut across countries, especially in Sub-Saharan Africa, from Nigeria to Kenya, South Africa to Uganda, and beyond. Here’s a no-nonsense look at the biggest procurement challenges and how savvy business owners are overcoming them.

Finding Reliable Suppliers in Africa

This is the top challenge for businesses across Africa. Sourcing quality products from trustworthy suppliers, delayed shipments, substandard goods, and unreliable partners who disappear after payment can cripple your operations and damage your brand.

“We lost a huge order because our fabric supplier showed up three weeks late. Our reputation took a hit we couldn’t afford.” – Grace N., Fashion Retail, Nairobi.

What Actually Works:

• Leverage Vetted B2B Marketplaces: Start your search on reputable African e-commerce platforms that pre-qualify their partners. This removes guesswork and adds a layer of security. Key examples include Sokowatch (for sourcing suppliers in East Africa), TradeDepot (for connecting with Nigerian suppliers) and Research country-specific B2B platforms to find local suppliers near you.

• Conduct Rigorous Supplier Due Diligence: Before signing a contract, invest a small amount of time to verify their credibility. The most effective method is to call the supplier and directly request 2-3 client references, and also call those references. A five-minute conversation with an existing client about their experience with on-time delivery and product quality is more valuable than any sales pitch. This due diligence is critical for risk management.

• Start with a Trial Order: Never commit to a large purchase initially. Place a small test order to evaluate the supplier’s performance, product quality, and consistency. This low-risk strategy allows you to build trust and verify their reliability before scaling up.

2. Cutting Procurement Costs with Smarter Sourcing

Struggling with high procurement costs is not unusual. While large corporations benefit from bulk discounts and preferential logistics rates, small and medium businesses often pay a significant premium that erodes their profit margins and competitive edge.

“Quoting a client is a nightmare. By the time I factor in the insane cost of logistics from Mombasa to Kampala, my price is no longer competitive.” – James T., Electronics Vendor, Uganda.

You can’t change your size overnight, but you can change how you buy. This shift in strategy is your greatest leverage against higher costs.

• Team up: This is the oldest trick in the book for a reason. Find two or three other small businesses (who aren’t your direct competitors) and pool your orders. Walking into a supplier with a combined order suddenly gives you the bargaining power you need.

• Go local (if you can): That international supplier might seem cheaper, but have you calculated all the hidden costs—shipping, government taxes, customs duties, and delays? Often, a local or regional supplier ends up being cheaper and far more reliable.

3. From Paper to Digital: Affordable Procurement Tools

If you’re tracking inventory in a notebook and orders on scattered WhatsApp chats, you’re not alone. But this chaos leads to overstocking, stockouts, and wasted money.

You don’t need a complex, expensive system to get organised.

• Start with one tool: Pick one area to digitise first. Is it tracking inventory? Use a simple (and often free) app like Zoho Inventory or Vendease. Just getting your stock levels online and visible will save you countless headaches.

• Use what you have: You don’t need a fancy ERP system. A well-organised Google Sheet shared with your team is a million times better than a paper ledger.

4. Navigating Customs and Cross-Border Trade More Easily

Customs clearance and cross-border trade are among the most daunting challenges for African SMEs, especially in sub-Saharan Africa. Complex regulations, documentation errors, and unexpected delays can cripple cash flow and erode profits. However, with the right strategies, you can streamline the process and turn logistics into a competitive advantage.

“My goods spent three weeks at the port. The demurrage fees alone erased our profit for that quarter.” – Fatou S., Food Processing, The Gambia.

Here’s how to simplify customs clearance and international shipping:

• Master the Documentation: Most delays are caused by incorrect or incomplete paperwork. Having the right documentation in place is your first line of defence against costly disruptions. Start by consulting the customs checklist issued by your national customs agency. For broader guidance, the International Trade Centre provides valuable resources on standard import documents. To further reduce delays, digitise your process. Create a secure cloud folder to store scanned copies of key documents, such as the certificate of origin, commercial invoice, packing list, and bill of lading. This not only ensures you have quick access to your records but also allows you to share them easily with customs agents or officials, helping to streamline clearance and speed up the overall procedures.

• Work with a Licensed Clearing Agent: A skilled agent is worth their weight in gold. They understand local nuances, regulatory changes, and how to navigate bureaucratic hurdles efficiently. They prevent costly delays, minimise demurrage fees, and handle complex paperwork on your behalf. It is important to seek referrals from your chamber of commerce or industry associations. Verify their license with your national customs agency to avoid scams.

• Leverage the African Continental Free Trade Area (AfCFTA): The AfCFTA is revolutionising intra-African trade by reducing tariffs and simplifying cross-border protocols. Look for suppliers in member countries. This not only reduces import duties but also shortens shipping distances and timelines. Ensure your products qualify for benefits by checking the rules of origin criteria specific to your goods. For businesses seeking to optimise intra-African trade, understanding compliance is not just an advantage; it’s a necessity for long-term growth.

5. Managing Currency Risks in Procurement

You budget for an order when $1 = ₦700, but by the time you make payment, the rate has shifted to ₦1,300 per dollar. Suddenly, what looked like a profitable order has turned into a loss.

If you’re in Ghana, Kenya, or South Africa, the numbers may look different, cedis, shillings, or rand, but the story is the same: forex volatility can wipe out your margins overnight.

You can’t control the forex market, but you can protect your business from its swings. Here are three practical strategies:

• Talk to your bank: Ask about a forward contract. This allows you to lock in an exchange rate for a future date, so you know exactly what your costs will be. It’s one of the simplest ways to protect your profits and sleep better at night.
• Bill in your local currency: When selling to local customers, always price and bill in your national currency. This shifts the forex risk away from you and onto the buyer.
• Source within your region: The best way to avoid dollar volatility is to avoid the dollar altogether. Sourcing goods within your regional economic community (such as ECOWAS, EAC, or SADC) allows you to trade in local currencies, cutting exposure to unpredictable dollar movements.

For African businesses, hedging against forex risk and embracing regional sourcing are essential strategies for building resilient supply chains.

Build a More Robust Business, One Step at a Time

You became an entrepreneur to build something great, not to get bogged down in logistics paperwork. But here’s the secret: mastering procurement isn’t about adding more work; it’s about working smarter to remove obstacles to your growth.

You don’t need a grand overhaul. Sustainable change starts with a single, focused action.

This week, commit to just ONE of these actions:

• Diversify Your Supply Chain: Spend 30 minutes on Sokowatch or TradeDepot to identify one credible backup supplier for your most critical material.

• Unleash Collective Power: Call one other business owner you trust and have a real conversation about combining your next purchase order.

• Digitise One Process: Download a free trial of a tool like Zoho Inventory and use it to track just one product category for one week. See how much clarity it brings.

Small, consistent actions create unshakable businesses. The best time to start was yesterday. The second-best time is now.