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

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 officials over the last year. To add to the body of knowledge about what small businesses need to survive the challenges presented by the COVID-19 pandemic and to be resilient to future challenges, the Visa Economic Empowerment Institute (VEEI) surveyed three thousand firms in five developing countries in October—a full six months after the onset of the crisis in most of the world. Over two thousand of the responses were from micro (1-10 employees), small (11-50 employees), and medium-sized (51-250 employees) firms across more than 20 business sectors, with the remaining responses from larger firms. In the survey, VEEI asked MSMEs in Brazil, Colombia, Malaysia, Philippines, and South Africa about their 2020 prospects and what adaptations they had made to weather the crisis, including what assistance they had received from public authorities. The survey also asked what MSMEs needed most to survive the next three to six months, and how they felt about their 2021 business prospects. The survey was conducted as much of the world was starting to experience an aggressive new wave of COVID-19 cases, though this new wave was not obvious when many of the firms responded—nor had respondents received news of imminent vaccines.

This paper will discuss the importance of MSMEs, how we should think of them in this new era, and the challenges they face, both from long term trends towards digitization and the acceleration caused by the pandemic. The paper then takes a brief look at insights offered by a few other surveys of small businesses in 2020. It will then examine the trajectory of the pandemic in Brazil, Colombia, Malaysia, Philippines, and South Africa before discussing the key findings of the digital survey VEEI conducted in the fall. Next, the paper will take a step back from the pandemic and examine global policies and incentives that were already being employed by the public sector to help digitally enable their citizens and small businesses, and highlight ones that seem to enjoy the most success. Then, with the MSME survey findings and policy examination in hand, VEEI will offer some public and private sector recommendations for helping MSMEs to weather this crisis and become more resilient to future ones in an increasingly digital and connected era.