There has been much talk during the COVID-19 lockdown worldwide of its particularly devastating impact on the sector of small and micro enterprises (SMEs). Very little of the discussion about SME challenges and solutions has come from entrepreneurs themselves. That is why we have responded by asking Africa’s leading entrepreneurs to lay out the support they need at our upcoming eSummit.
But there is one thing we can all do for SMEs, as business leaders on the continent. I call on all of us to help save hundreds of businesses and livelihoods, not just during the pandemic but on a sustained basis, through a simple yet significant act: let’s pay SME service providers on time.
The private sector knows that for SMEs, the sudden halt in economic activity is devastating. Small businesses are bearing the brunt of the COVID-19 related economic fallout. Liquidity and cash flow are well-known issues in the sector, where cash reserves can dry up in a matter of weeks. The pandemic provides us as business leaders an opportunity to join a growing trend to viewing long remittance cycles as poor business ethics.
Even before the pandemic, economist Sid Boubekeur argues in this newsletter, SMEs have long protested the lack of access to credit finance to alleviate their cashflow burdens. For example, as small business platform Xero finds in its end-2019 State of Late Payments report, in South Africa a staggering 91% of small businesses were owed money outside of their payment terms.
Knowing all of this, it is not acceptable for multi-million-rand companies to claim a lack of funding as a reason to delay payments to SME service providers. And as a Shared Value leader, practitioner and advocate, I would argue that paying on time would also be Shared Value in action.
Not surprisingly, Shared Value Africa Initiative members are again showing the way by launching comprehensive relief plans during the pandemic SME clients. Among others Absa has launched an extensive COVID-19 payment relief plan; Safaricom has partnered with KCB Group to announce a Ksh30 billion stimulus package; Old Mutual has launched a comprehensive COVID-19 response; and Nedbank has offered help to SME clients experiencing payment difficulties.
Communicate, communicate, communicate
What are the other practical steps that we as companies can take within our businesses to alleviate society’s pressures during the pandemic?
I have seen enormous amounts of good work being done in society by businesses across the continent. However, companies can afford to spend even more time talking to employees, suppliers and clients about ways we can solve their day-to-day challenges. Another important practical step is to prepare our workforces to work from home, something we within our consultancy Shift Impact Africa are being asked to assist with, given this is business unusual for all of us.
Time to register for the eSummit
There is still time to sign up to attend Beyond Borders: 2020 Africa Shared Value Leadership eSummit, the continent’s first ever virtual Shared Value Leadership event, from 2-5 June 2020. As eSummit keynote speaker and Harvard University Professor Mark Kramer said in a recent interview: “The COVID-19 crisis is not likely to be the only pandemic we see in our lifetimes. Businesses are beginning to learn that they have to adapt what they do in order to be better prepared for this kind of crisis in the future. There’s never been a clearer example of how the success of business depends on a healthy society and how the health of society depends on a strong economic base.”
To learn more, and to register to attend, visit our website, www.africasharedvaluesummit.com.