DIGITAL MARKETS NEW WAY OF DOING BUSINESS

MBABANE – The rise of the digital economy creates both opportunities and challenges for developing countries and their businesses.

This is highlighted in a report of a study on a financing model for Micro, Small and Medium-Sized Enterprises (MSMEs) in the Kingdom of Eswatini. Eswatini is a developing country and is classified as a lower-middle income economy. The study is a product of technical assistance from the Economic Commission for Africa (ECA) to the Government of the Kingdom of Eswatini following a call by the latter for support in developing an inclusive financing model for MSMEs. ECA hired a consultant identified as Vinaye Ancharaz, who is an economist from Mauritius. The latter undertook a thorough analysis of the MSME financing problem. He proposed a financing model to Eswatini. The model was virtually launched by the Minister of Commerce, Industry and Trade Manqoba Khumalo recently.
According to the report, digital or online markets represent a new way of doing business and firms that fail to embrace digital technologies may find themselves outcompeted by those that do.

Electronic

“Electronic commerce can allow MSMEs to reach more customers, including in remote locations and in foreign markets. “It also makes possible for MSMEs to source inputs and supplies competitively from a growing number of online retailers,” highlighted the report. Information, community and technology-enabled services, according to the report, can be leveraged both as a business opportunity by internet start-ups and a strategy by SMEs to cut costs by outsourcing non-essential services. “Digital technologies can give SMEs a global presence, allowing them to compete directly with larger firms,” stressed the report.

There is growing evidence that technology-enabled SMEs export more successfully than ‘traditional’ ones. “Digital technologies are a source of innovation and growth, and as highlighted by the COVID-19 pandemic; those SMEs that failed to shift to online modes of delivery during periods of lockdowns witnessed a sharp drop in sales, forcing some to close shop. Embracing digitalisation can make SMEs more resilient and more competitive as well as facilitate their access to international markets,” shared the expert in the study. However, the quality of information technology infrastructure and related services in developing countries is said to be putting their firms at a competitive disadvantage relative to firms based in industrial countries.

Enabling digital transformation calls for policy interventions in several factors including access to digital technology across the economy, with particular attention to ‘enabling inclusive, efficient and secure digital payments for MSMEs. “New technologies, such as artificial intelligence, 3D printing, big data and the internet of things are rapidly changing the business ecosystem around the world,” reads  the report.

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