While thousands of small businesses crumbled under the weight of the economic slump brought on by the recession and COVID-19 pandemic, many of them went digital to survive. The Small Business Institute (SBI) said that this has signaled a positive change for SMMEs.
In its research paper titled: “Digitalisation—the best hope for South Africa and its small firms”, the SBI noted how digitalisation was essential for SMMEs which wanted to participate in the future economy. “More than a few of those (businesses) that survived found ways to adapt and change how they conduct business, what or how they sell, and some intrepid and truly entrepreneurial souls started new businesses during the crisis,” the SBI noted.
“Other business owners, in digital or data-related industries, developed tech-based products or services like medical or contactless payment apps, or new uses for ‘wearables’, part of the Internet of Things wave gathering place. “Those who reacted quickly adopted new ways to sell, or manage their staff, operational and financial information using digital technologies, products, or services like social media and the cloud,” the research found.
But the small business that is not tech-savvy, mostly turned to their cellphones and social media to do business and reach out to their customers. “Arguably the most important tool for countless surviving SMEs has been the cellphone,” the SBI said.
“Smartphones particularly offer a universe of opportunities: services, apps, information, access to markets, education and, importantly, social media platforms to market and now sell products and services. “WhatsApp, Facebook Shop, Messenger, SMS, Twitter, Instagram and TikTok allowed small businesses (whether informal or formal) to show off their wares, communicate with customers, collect their data, take their money and arrange delivery,” the report reads.
But the SBI said while SMMEs have attempted to change, government policy had not done enough to support them in the digital economy. It criticised the government’s lack of readiness in preparing South Africans for an environment that needed to migrate to the digital space.
“The National Planning Commission’s ‘Digital Futures—South Africa’s Readiness for the Fourth Industrial Revolution’ was particularly harsh,” the SBI said. “It cited institutional failures ranging from the botched digital migration and debacle over the release of spectrum allocation, delayed for nearly a decade, to weak political appointments, corruption and a lack of leadership.”
In the face of these failures, the SBI recommended some steps that the government needed to adopt. It that the state needed to ensure that the requisite and affordable digital infrastructure was in place to achieve economic advancement and inclusion and that it sought public-private partnerships to help find solutions to build and improve e-governance.
It also called on the government to ensure that the details of procurement procedures were online and transparent, as this would enhance efficiency and minimise corruption.