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Majority of SMEs anticipate growth next year, says Mastercard

While challenges related to the Covid-19 pandemic remained, six out of 10 small and medium, enterprises (SMEs) in South Africa said they were proactively planning for and anticipating growth in the next year, according to Mastercard’s white paper. Photographer: Waldo Swiegers/Bloomberg

While challenges related to the Covid-19 pandemic remained, six out of 10 small and medium, enterprises (SMEs) in South Africa said they were proactively planning for and anticipating growth in the next year, according to Mastercard’s white paper. Photographer: Waldo Swiegers/Bloomberg

Published Dec 16, 2021

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WHILE challenges related to the Covid-19 pandemic remained, six out of 10 small and medium, enterprises (SMEs) in South Africa said they were proactively planning for and anticipating growth in the next year, according to Mastercard’s white paper which explored the way small businesses were viewing digital payments, online presence and the benefits of an evolving cashless economy.

The white paper, titled “The Digital SME: How Are Small and Medium Enterprises in the Middle East and Africa Embracing a Digital Future?” is an in-depth follow-on study from the data-rich Mastercard MEA SME Confidence Index 2021.

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SMEs said their growth would be guided by the need to upskill their staff, better data, digitising business operations and accepting digital payments across multiple channels.

According to the Index, 88 percent of South African SMEs said digital and online payments were important to helping them grow their businesses, both now and in the future.

Contactless payment technology was also identified (86 percent) as a safer and more efficient way to transact and another 75 percent have seen a rise from their customers who preferred to transact digitally since the pandemic.

According to the Organisation for Economic Cooperation and Development (OECD), up to 70 percent of SMEs globally had intensified their use of digital technologies in the wake of Covid-19. However, the gaps in SME digital adoption had not been filled.

The challenges include access to infrastructure, lack of a data culture and digital awareness, and financing gaps for transformation costs, among others. Access to financing remained a key concern for SMEs worldwide, with the IFC estimating an unmet need of $5.2 trillion (R83 trillion) per year.

SMEs in South Africa and across the Middle East and Africa (MEA) region were recognising digitalisation as essential to staying competitive in a transformed business and economic environment.

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Overall, 64 percent of South African SMEs said they believed e-commerce would have a positive impact on their business. The findings also indicated that South Africa, by far, was the leader in digitalisation across the MEA region, with more than nine in 10 companies present on social media and/or a company website.

Over three-fourths (79 percent) of South African SMEs surveyed accepted online payments, 48 percent accepted cards, and 41 percent accepted mobile payments.

According to the index findings, 61 percent of South African SMEs experienced no challenges when accepting digital payments. When asked about the biggest benefits for a cash-free economy for their business, the majority (90 percent) of South African SMEs said “digital solutions provided more efficient transactions and payments across multiple channels” and “a more convenient way of paying their suppliers and employees”.

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Other benefits identified include faster access to revenues (85 percent) and the ease of not handling or processing cash (79 percent).

Mastercard Middle East and Africa head of products Gaurang Shah said an empowered SME sector was a growth engine for the economic development of countries across the Middle East and Africa.

“But the challenges are many, chief being access to funding and digitalisation which have emerged as huge needs. The Mastercard MEA SME Confidence Index found that 89 percent of SMEs in the region see potential in digitalising their business, which is encouraging for everyone within the digital economy,” Shah said.

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