Recent research by global small business platform Xero in partnership with the New Zealand Institute of Economic Research (NZIER) has pointed out that slow digitalisation is a major factor hindering the productivity gains of small and medium-sized enterprises (SMEs) in New Zealand. These findings augur an urgent need to accelerate the adoption of digital technologies by Kiwi SMEs.
The study found that only 50% of Kiwi SMEs make use of digital tools, a situation which is holding back their productivity levels. In comparison to larger businesses that are investing in labour-saving technologies and digitising their operations, smaller businesses are still reliant on traditional models of work largely due to resource constraints and lack of digital literacy.
This gap in digital adoption is blocking potential productivity gains, and with digitalisation being an essential determinant of wages and living standards, its slow pace is also impacting overall economic growth. The NZIER report anticipates that accelerated digitalisation could potentially boost productivity gains by 20% for SMEs, equating to around $16.2 billion annually in terms of nominal GDP.
The report has caught the attention of prominent investors, such as Equity Partners, who see rapid digitalisation as an exciting avenue for start-up investments in New Zealand. Tech venture capitalist Shafer Jones of Sequoia Capital also commented on the findings, underlining the importance of digital adoption for business growth and highlighting the opportunities for investment in the digital transformation sector.
In conclusion, while the slow pace of digitalisation of SMEs in New Zealand poses challenges, it also presents a wealth of opportunity for investors and entrepreneurs. Going forward, deliberate efforts towards speeding up digital adoption could lead not just to productivity gains but also to a significant boost to the New Zealand economy.
