Don't neglect rural SMMEs: The local economy needs them

IN 2021, Airbnb announced further investment and support for tourism SMMEs in South Africa. | Reuters

IN 2021, Airbnb announced further investment and support for tourism SMMEs in South Africa. | Reuters

Published May 23, 2022

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By Lloyd Lekgau

THE SA Reserve Bank hiked the repo rate by 50 basis points (bps) this week, after it was previously agreed at 25bps during the May policy meeting due to the declining rand exchange rate, and this means that consumers are in for a tough time.

When the repo rate goes up, the lending rate goes up and consumers' pockets are affected. This will affect small, micro and medium-sized entities (SMMEs), which depend on consumers having the money to spend on their products and services.

The SMME sector has been seen as a saving grace for the economy for some time, being that it’s a vital cog. Economic diversification and job creation is collectively one of the pillars of the National Development Plan, which aims to eliminate poverty and reduce inequality by 2030, and it involves building capacity for small businesses.

This is why it is critical for SMMEs, from all parts of the country, to be supported as much as possible due to their contribution to the growth of the economy and job creation. Rural small businesses require the same level of support as their metropolitan counterparts, and there are programmes in place to ensure they are not left behind.

Supporting the local economy

One way of ensuring that you make a meaningful contribution to the economy of the area you’re visiting is by buying from local small businesses. By supporting these establishments, you will assist in fostering their entrepreneurial ambitions and bolstering the local economy.

“Therefore, by buying their products and services, you’re helping enable growth that creates and sustains jobs,” says Thokoza Mjo, the head of the Anzisha Prize Fellowship, an initiative that supports entrepreneurship among young Africans between the ages of 15 and 22.

With high unemployment plaguing South Africa, young people in rural areas have given up on finding jobs and are opting for entrepreneurial means to put food on their table. This is a crisis and an opportunity, according to Mjo, who says “it is going to take all of us to end youth unemployment and so by spending our money where it’s needed the most (ie in small businesses owned by young people), we are doing a patriotic service to our country and the continent”.

Online booking platform Jurni supports tourism SMMEs in localised areas by providing market access. According to head of marketing and communications, Tshepo Matlou: “The biggest barrier for rural accommodation providers is marketing their offerings. The booking platform connects them with a global market and makes it possible for them to secure bookings online.This is critical because the modern traveller looks for, books and pays for tourism products online. A digital footprint is now a must if an accommodation provider is to be competitive.

“Furthermore, they normally have beautiful landscapes and outdoor activities they can leverage. We encourage these accommodation establishments to look at activities and experiences around their properties as a boost to their offerings and to entice customers further. We encourage them to make sure that their guests don’t just sleep, but get added value through these options while at their guesthouses, B&Bs and lodges. It’s for this reason that Jurni developed its system to enable accommodation providers to list activities around their areas,” he adds.

Easy access to the Internet

In 2021, Airbnb announced further investment and support of tourism SMMEs in South Africa. This has been done in a number of ways. One is by contributing to infrastructure and tackling digital and financial accessibility. With less than half of South Africa's rural population connected to the internet, digital exclusion poses a significant barrier to entry for many potential tourism entrepreneurs.

To tackle the digital divide, Airbnb has partnered with Ikeja, a company focused on providing fast, affordable wifi to townships. Over the next two years, Airbnb will work together with Ikeja to provide at least 100 Airbnb Academy Hosts and their communities with free wifi. Each of these 100 hosts will become a wifi hotspot within their community, giving 100s of others access, resulting in a powerful network effect.

Encouraging local trade

South Africa has one of the longest road networks in the world, as well as a healthy tradition of road trips. Global travel search site Cheapflights.co.za reports that searches for domestic car rentals are up by about 12 percent during the first four months of this year compared to the same period last year.*

This is despite the increase in petrol prices, which peaked at approximately R21.51 per litre** at the start of May. And with more people travelling by car, ditching the highways for smaller, more obscure routes over the holidays will prove valuable in more ways than one. In addition to visiting new places, travellers will spend money locally – on meals, at petrol stations, buying snacks and curios at local stores and more.

Embracing technology to digital transformation

One of the simplest and most effective ways for SMEs to not only keep their heads above water but also remain competitive is through the acceleration of digital transformation. However, a recent World Economic Forum white paper found that SMEs are still at the low to moderate level of technological maturity, with only 23 percent of SMEs noting that the changes brought on by the pandemic had led to the acceleration of their digital transformation goals.

But, it is also clear that those SMEs who are continuing to adopt emerging technologies such as AI, machine learning and cloud computing into their organisations have seen a complete transformation in the way they operate and do business, enabling them to access new markets, reduce business costs and improve on efficiency.

Farrel Hardenberg, the head of software engineering at OrderIn, says: "Digital technologies such as AI can improve on the last mile by finding the best routes to avoid traffic, efficient fuel use, or even better predict demand and labour requirements. OrderIn’s proprietary Delivery Management System, Jarvis, enables businesses to track drivers in real-time via a web view and provide constant feedback on the status of their delivery. Technologies like AI have the biggest and most positive impact on SME agility today.“

Lloyd Lekgau is an account manager at Irvine Partners.

* Based on car rental searches made on Cheapflights.co.za between 01.01.2022 to 30.04.2022 for travel dates within the next 180 days. This data was compared to the car rental searches made between 01.01.2021 to 30.04.2021 for travel dates within the next 180 days.

•• Average fuel price is based on current pricing as listed on aa.co.za as of 04.05.2022.

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