Cutting-cost during COVID-19


…T4SD Hub Ghana beneficiary SMEs reveal simple steps

The coronavirus crisis is shaking the whole world, with devastating consequences on health and businesses. For many small and medium enterprises (SMEs) in Ghana, this has led to obvious internal cost-cutting measures such as a reduction in the frequency of travels, lay-offs, and a search for external financial support such as accessing the GHS 600 Million COVID-19 Government of Ghana Stimulus Package for SMEs.

While the focus on these measures is understandable due to their promise of quick relief, there are several unobvious wastages in enterprises’ internal production processes that when eliminated can offer equally quick and even long-lasting opportunities during and after the pandemic.

Before COVID-19, the Trade for Sustainable Development (T4SD) Hub Ghana—an International Trade Centre (ITC) programme hosted in Ghana by Ghana Export Promotion Authority (GEPA)—had been working with 15 selected Ghanaian export-oriented SMEs to reassess how they view risk and returns of their resource efficiency business practices.

Through a customised coaching approach, the Resource Efficiency and Circular Production Processes (RECP) module of the T4SD aims at increasing the competitiveness of SMEs in international value chains through reduced consumption of resources used in production processes and enhanced productivity. To achieve this, ITC-trained resource efficiency experts embarked on field data collection; visiting SMEs in the shea butter, cocoa, and fruits and vegetable processing sectors to understudy their practices.

Gaps in the production process

From the data, the experts assessed SMEs’ resources efficiency management—identifying key gaps that produce wastages in their water and energy usage, and waste generation. Although some of the gaps were obvious to the SMEs, many lacked actionable steps to address them and reap the benefits that come with them.

Take water usage for instance. Over 90 percent of all companies studied were found to exceed the water consumption benchmark by between 18 percent to 25 percent. These companies mostly lacked water mass balance analysis and other water use management plans that can enable them to track the amount of water used in their production processes. The result is excessive water wastages with no plans for recycling and reuse.

The story was not different on energy usage. Several of the companies ‘energy consumption exceeded comparable industry benchmark values by over 25 percent. These high consumption levels were mostly attributable to the usage of inefficient motors and processing technologies; lack of consistent maintenance of machines and improper calibrations, as well as excessive heat losses as a result of poor factory floor layout and ventilation design.

Moreover, majority of the companies openly disposed of the waste without sound disposal practices. Mainly waste generated was not seen as valuable and thus was not recovered or recycled.

These gaps have direct implications on companies triple bottom line and addressing them means improving both the short term and long term economic, social and environmental gains of SMEs. To address the gaps, the experts worked with SMEs in identifying opportunities and assessing the cost and benefits for improving their production processes.

The measures included several low-cost initiatives that are even more crucial for many SMEs in Africa during this period of COVID-19 where the continent‘s SMEs are exploring strategies to stay in business.

Quantify inputs and introduce low-cost initiatives

First, SMEs can reduce their water usage by installing simple water meters to begin measuring quantities of water used per month or production cycle even if they source water from their wells or boreholes.  Simple water tanks and pumps can also be installed to capture and cool used water which can be reused for cleaning and other purposes. Such installations should go hand-in-hand with employee education on efficient use of water.

Next, by assessing their ventilation designs, enterprises can make simple design changes that allow them to use natural lighting (eg. installing transparent fibre sheet) as much as possible. This will help reduce their electricity bills. Where using natural lighting is not possible, energy-saving bulbs, equipment, and proper calibration of processing machines can offer quick energy gains. For SMEs in the shea and other sectors who depend solely on a traditional 3-stone stove powered by biomass for processing, investing in low-cost efficient improved stoves could lead to significant savings on firewood and charcoal usage.

In the medium to long term, enterprises can explore the possibility of reusing their waste as a resource. From the studies, it was clear that the majority of the SMEs can explore the conversion of their waste into biomass fuel. For instance, briquetting of waste as a fuel source to power other production processes is feasible for several SMEs due to the availability of low-cost briquetting technology.

Similarly, companies can consider local water recycling and recovery technologies such as the Nnsupa Ceramic Water Filtering System, which is a non-chemically treated ceramic water filter capable of reducing pathogens, chlorine and lead from water. Those with better cash flows may consider solar technologies to augment their power supply and reduce their dependency on the unreliable main grid.

COVID-19 is an external threat that SMEs could not have foreseen, but all of them surely can use their strengths to turn the crises into an opportunity—they only need to look internally on their resource use to discover these strengths.

Article by:

Ebenezer Kumi, Trade for Sustainable Development (T4SD) Hub Lead, and Resource Efficiency Experts: Lawrence Amaning, Ishmael Edjekumhene, Samuel Entee Jnr and Emmanuel Appiah

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