Small Business in the Digital Age: Recommendations for Recovery and Resilience

This article examines the results of a survey of small businesses in five developing countries (Brazil, Colombia, Malaysia, Philippines, and
South Africa) and finds that firms that embraced digital commerce and cross-border capabilities before and during the pandemic have weathered the crisis better than others and are more optimistic for the future.

Synopsis

Greater digitization of commerce has brought enormous benefits to businesses and consumers. By using digital payment capabilities and online marketplaces, many micro, small, and medium enterprises (MSMEs) are more able to compete with larger firms through greater customer choice and reach. This article examines the results of a VEEI survey of MSMEs in five developing countries (Brazil, Colombia, Malaysia, Philippines, and South Africa) and finds that those firms that embraced digital commerce and cross-border capabilities before and during the pandemic have generally weathered the crisis better than those that continue to rely primarily on face-to face transactions, and that these firms are more optimistic for the future. Furthermore, survey responses indicate that more small businesses want improved internet connectivity, assistance with digital commerce, and help with cybersecurity than want direct financial support from governments. These findings help inform several recommendations to policymakers on measures they can take—and some they
should avoid—to help their small businesses recover and thrive.

Executive Summary

The survival of micro, small, and medium sized enterprises (MSMEs) during the COVID-19 health and economic crisis has demanded the attention of public and private sector leaders over the course of 2020. This topic will no doubt occupy policymaking attention well into 2021. To better understand the essential factors for small business survival in the pandemic, the Economic Empowerment Institute undertook a study of the current business environment, future outlook, and commercial adaptation strategies in Brazil, Colombia, Malaysia, Philippines, and South Africa. This study on small business recovery and resilience is just the beginning of the Visa Economic Empowerment Institute’s engagement at the intersection of small business resilience, payments and technology policy, and digital equity and inclusion. The study team hopes these insights assist policymakers in plotting a course to digitally enable individuals and small businesses.