Helping Small Businesses On The Road To Recovery From The Coronavirus Pandemic
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“The world won’t bounce back until small businesses bounce back,” said Mary Kay Bowman, Global Head of Buyer and Seller Solutions, Visa Inc.
Small and medium enterprises (SMEs) are key to the health and well-being of economies around the world. According to the International Labour Organization (ILO) ‘small economic units’ account for 70% of total employment, making them by far the most important drivers of employment worldwide.
In the UAE, SMEs makeup more than 94% of the nation's total number of companies and employ over 86% of the private sector workforce. In addition, these companies play an essential role in the lives of their customers and in the success and vibrancy of their local communities.
And while COVID-19 has had a significant impact on all sectors of the economy, small businesses have been amongst the hardest hit by the impact of the novel coronavirus pandemic.
A survey by the Dubai Chamber of Commerce and Industry, found that more than two-thirds of small businesses in Dubai see a moderate-to-high risk of going out of business before the end of the year as a result of the coronavirus (COVID-19) crisis. Visa's COVID-19 Impact Tracker, an ongoing survey of merchants and consumers across the Central Europe, Middle East and Africa (CEMEA) region, revealed that more than 80% of small businesses in the UAE have seen their revenues negatively impacted following the outbreak.
The bottom line: now is the time to step up to help small businesses stay afloat and support a steady recovery of this vital sector beyond the virus' lifetime- and financial organizations have a huge role to play in the process.
Challenges to survival
According to Visa's COVID-19 Impact Tracker, small businesses in the UAE saw a staggering 86% decline in customer purchase frequency during the pandemic– the highest in the region. Understandably, 8 out of 10 (82%) those business owners said they were suffering a severe mental anxiety.
As they continue to experience fewer sales and uncertainty around the future of their enterprises, it is clear that financial organizations and banks can help alleviate some of the anxiety by providing professional guidance and support, particularly to traditional sellers that need to transition to online models and digital payments.
Visa's Impact tracker found that 80% of consumers in the UAE have made changes to their shopping behaviour and close to half said they intend to continue the same habits even after government restrictions are fully relaxed. For example, the outbreak has led around two-thirds of consumers in the UAE (68%) to shop for groceries online.
Small merchants need to look at how to enhance their online avenues to remain popular with regular customers and acquire new ones too. With this in mind, Visa has launched a ‘Small Business Hub’ -as part of our regional initiative “Where You Shop Matters”- to provide merchants with information toolkits for digital growth and resources on how to move to new digital ways of working to help them get back on their feet again.
Providing payments support
Streamlining payment processes through the provision of the latest digital technologies is one area where financial institutions can help small businesses. As managing cash flow becomes an urgent daily priority for small businesses, banks can help by providing SMEs with payment options, such as business cards and related payment services that support their ability to save time and money, enhance control and visibility over their spending through dashboards, and deliver purchasing power and business protection. This is especially important for those businesses that are used to large non-electronic transactions.
More than half of transactions in UAE are made using contactless cards or devices, according to Visa's Impact Tracker, and sellers that still use cash-on-delivery as the primary mode of payment will need to swiftly implement a contactless consumer journey to survive. Tools and resources to help drive traffic are also a huge help to small sellers reliant on the physical presence of consumers and those with limited or no digital presence.
Visa's Back to Business Project, for example, that was created in 2017 in the aftermath of Hurricanes Maria and Harvey, is designed to help consumers locate small businesses that were open in the wake of a natural disaster, providing a critical economic boost to support local economies. To The site is now available across all states in the U.S. and discussions are underway to launch in more markets before the end of 2020.
The magnitude of support highlights recognition for the critical role SMEs play in the economy and how important it is for them to recover. The entrepreneurial spirit and innovative thinking that startups and small businesses bring to the table will help create new industries and transform existing ones to thrive in the post-pandemic world.
As economies begin to ease restrictions and restart activity, we are well on our way.