The majority of small and medium-sized businesses across five countries in the developing world, viewed digital capabilities as the most important survival factor in the current business environment and beyond.

This is a key finding of a study recently conducted by the Visa Economic Empowerment Institute across South Africa, Brazil, Colombia, Malaysia, and the Philippines.

The online survey shows a range of factors that enabled small businesses to survive in 2020 while also focusing on the current business environment, future outlook, and commercial adaptation strategies across the five countries.

According to the survey, firms that embraced digital commerce and international commerce capability were able to weather the challenges brought by Covid-19 better than others and are more optimistic for the future.

“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)have found ways to remain operational and connect with customers during the Covid-19 pandemic”, says Aldo Laubscher South Africa country manager at Visa.

In terms of what they need most, the overwhelming majority of MSMEs say they need customers to return, followed by digitizing their sales channels (to reach customers who cannot physically return), acquiring better internet connections, and improved digital payments capabilities.

“Cybersecurity capabilities were reported as a survival need by over two-thirds of firms across all sizes, with more than one-third reporting cybersecurity as a strong need. Fewer, but still nearly a third of all firms, expressed a strong need for more loans or grants,” adds Laubscher.

The findings were largely similar across all five countries save for minor nuances specific to each country. A third of the surveyed firms managed to weather the crisis or even thrive, while one-half saw steep declines in business activity and revenue.

More than 60% of MSMEs of all types and especially micro-enterprises were adversely impacted in the Covid-19 crisis, with growth stagnating and turning negative. However, those that accept remote orders as their primary sales method, use marketplaces, and export goods mitigated the impact of the crisis across all firm sizes from micro to large.

In other words, digitisation, and export market diversification cushioned firms against the crisis. Firms that were deemed essential and that kept their doors open, especially ones that took remote orders, also did better.

Generally, mid-sized firms were the likeliest to receive assistance and to benefit from it; a significant share of micro-enterprises did not receive any assistance, perhaps due to a lack of awareness as to how to obtain it.

Moreover, MSMEs reported receiving different types of assistance to weather the crisis, especially in the form of loans, various digital capabilities, and better internet connections. The micro firms reported that better internet connectivity was the most often received and most useful assistance, just ahead of loans and digital payments.

The recommendations made by the study team for recovery and resilience going forward include emphasising the need for digital enablement assistance, prioritizing the setting up of digital infrastructure and keeping consumers in mind when driving digital ubiquity.