An international panel explored how governments have a key role to play in driving economic resilience and digitisation among small businesses during the unprecedented challenges brought about by the pandemic.

Small businesses are being disproportionately impacted by the economic damage of COVID-19 – and governments should maintain momentum to help with their digitisation – according to panellists at an international webinar featuring public- and private-sector representatives.

Small businesses are estimated to employ about 70 per cent of the world’s workforce and contribute around half of the world’s GDP. In less developed countries, small businesses are typically even more important to employment and GDP. But many – particularly those not used to doing things digitally – face tough times as the pandemic continues.

The webinar, entitled ‘Planning for recovery: how can governments worldwide help small businesses to ‘build back better?’, was organised by Global Government Forum and sister publication Global Government Fintech and supported by our knowledge partner Mastercard on 1 October.

A four-strong panel explored the greatest challenges faced by small businesses during the pandemic; how public and private sectors have collaborated to drive economic resilience and digitisation among small businesses; and how governments can best help small businesses understand and prepare for the world beyond the pandemic.

‘Backbone of communities across the globe’

Andrea Gilman

“We see small businesses as the backbone of communities across the globe,” Andrea Gilman, Senior Vice President and Global SME Segment Lead at Mastercard, told webinar participants. Mastercard announced in April that it would be committing $250m over five years to support small businesses on matters ranging from digital payments and digital store fronts to cyber-protection, as well as understanding where they are on their own digital journey. “The pandemic is affecting this segment more so than others,” said Gilman, adding “we really believe that ‘getting digital’ will help all businesses, and that is why we have launched digital acceleration programs in all markets across the globe.”

Tim Ogden, Managing Director of the Financial Access Initiative (FAI) at New York University Wagner – a research centre focused on exploring how financial services can better meet the needs and improve the lives of low-income households – said: “There’s no question that small businesses are bearing the brunt of the economic impact [of the pandemic].” Ogden said: “The majority of small businesses are owned by people with below-median incomes, and also create jobs for lower-income households. It’s the lowest-income wage earners who are seeing the biggest drop in wages [during the pandemic].”

‘Trend to digitalisation for state and business’

Pavel Vinkler

A government perspective of the panel was provided by Pavel Vinkler, who has been Director of the Czech Republic’s Department of the Business Environment and Internal Trade – part of the Ministry of Industry and Trade – since 2017. “The pandemic has shown a trend to digitalisation for the state and the business sector. Those [businesses] operating on the internet do not have as many losses as those operating in the traditional way – that is clear,” said Vinkler. He said his department’s top priority was helping “family businesses”, which he described as the backbone of the Czech economy.

Other initiatives cited by Vinkler that the Czech government has introduced to help small businesses include: a scheme to enable small businesses to trial point-of-sale payment devices, free of charge, for up to 12 months; a new web portal to give entrepreneurs a single point of direct access to contact authorities; and a decision to specify just two days each year – 1 January and 1 July – when new laws affecting small businesses can be introduced, to try to enable business owners to keep track of administrative and legal obligations.

Darryl Julott

The webinar’s fourth speaker was Darryl Julott, Managing Lead of Digital Main Street Canada, an initiative created by the City of Toronto and the Toronto Association of Business Improvement Areas (TABIA) in 2016 to help small businesses make the most of digital opportunities. For example, it provides free-of-charge coaching from a ‘Digital Service Squad’, typically comprised of recent graduates.

The pandemic had, naturally, seen many small businesses turn to the government first and foremost for help with support mechanisms such as wage subsidies and assistance with commercial rent, Julott said. “As COVID-19’s impact continues, these day-to-day concerns are “still very prevalent” and indeed “issues one, two, three and four” for many small businesses. When all this first happened back in March, business owners had so many other things [as a priority above digitisation] – they had to deal with life,” he said.

‘Need to ask what the long-term possibilities are’

Tim Ogden

In respect of initiatives that governments worldwide could typically invest greater resources in to help small businesses, Ogden suggestions included doing more to help firms with market access and helping small business owners to gain management skills. Governments, he said, should think creatively about schemes such as tax holidays, grants, equity, concessional credit and also protecting small businesses from “bad actors” such as fraudulent transactions and predatory lenders.

With reference to the pandemic, he said: “We need to ask what the long-term possibilities are, not just how we enable small businesses to survive, say, the next six weeks.”

Gilman also made the point that gender was typically given insufficient attention in debate about how the pandemic is affecting business, saying that women-owned small businesses have been disproportionately impacted.

Ogden also commented that programmes to help small businesses capitalise on digital opportunities need to be “holistic”. He explained: “I get concerned when I hear ‘All we need to do is get them [small businesses] online, then they’ll be fine’, which is markedly not the case.”
In answer to an audience question about why governments should invest in small businesses in particular, Ogden emphasised his over-arching message of their relatively greater importance as employer of lower-income earners, among other reasons.

Top recommendation to governments

To conclude, the panel – which was moderated by Global Government Fintech Editor Ian Hall – were asked for their single top recommendation to governments. Gilman emphasised the importance of ‘going digital’; Julott said governments should “explore more non-traditional partnerships – get out of their comfort-zones a little bit”; and Ogden recommended programmes to make “low-cost, concessional credit” available by working with private-sector lenders that would be unable to offer such terms without government support.

The FAI is about the launch the “Small Firm Diaries” project in collaboration with Mastercard Center for Inclusive Growth to gather data on the ‘financial lives’ of small businesses in six countries, including Ethiopia, Nigeria and Colombia.

This report covers Global Government Forum/Global Government Fintech’s 1 October 2020 webinar ‘Planning for recovery: how can governments worldwide help small businesses to ‘build back better? You can watch the whole session below: