MALAWI SMEs – THE ROLE OF DIGITALIZATION
The ongoing Covid 19 pandemic has changed everything. In the last few months, the world has evolved into living with the ‘new norm’. This has impacted businesses, irrespective of their size or sector. But in the case of small and
medium enterprises (SMEs), the impact has been particularly severe. For a country like Malawi, where SMEs have persistently failed to enter the formal market because they do not meet the minimum requirements stipulated in
relevant mandatory Malawi Standards, the emergence of Covid 19 has hit the operations of the SMEs even harder.
SMEs play a significant role in transforming the economies of countries, Malawi inclusive. They do not only provide employment to thousands of people, but they are also important suppliers and customers to larger enterprises, which is why they are so critical to economic recovery as nations grapple with the impact of the pandemic.
Recent media reports suggest that 20- 30 per cent of restaurants may never open again. And this seems to be the
same situation in many other sectors. For example, mass layoffs and closures had already occurred just a few weeks
into the COVID 19 crisis. Also the risk of closure of small businesses was negatively associated with the expected
length of the crisis since businesses had widely varying beliefs about the likely duration of COVID-related disruptions. Having said that, numerous reports have shown while SMEs in the country have a positive sentiment towards revival, there are areas that need immediate attention to ensure their survival and growth.
As we all have to learn to live with the COVID 19, there is no doubt that remote working will be in for the long tug.
Migrating to a digital-first business model will have to be top priority for SMEs in their turnaround roadmap.
Adopting technology will enable SMEs to be nimble and flexible in their operations but also equip them to
adapt to customer needs more quickly and reach beyond their borders. This was also echoed by Vice President of
Malawi, Dr. Saulos Klaus Chilima in his presentation during Southern African Development Community (SADC) that
there is need for countries to digitalize using faster internet connectivity to mitigate the economic havoc caused by Covid 19 pandemic. He further said there is enough evidence out there to show that growth correlates with how a
company values digital adoption for its success.
The good news is that some SMEs in Malawi have now started to understand the need for going digital and are keen to step up their use of online tools, digitise their processes to increase efficiency and productivity. But the main challenge is that SMEs in Malawi lack government support and availability of funds to innovatively boost their businesses. This early indicates that many SMEs do not have the right guidance or support to unlock innovation and transform their business models.
As such, there is a need for government to support SMEs or facilitate in negotiating with other stakeholders like IT companies that offer devices, services, or the knowledge to help businesses drive innovation through digitalisation. The government should move in quickly in building an enabling e-commerce ecosystem that requires changes in public policy and business practices to improve the digital and trading infrastructure, facilitate digital payments and establish appropriate legal and regulatory frameworks for online transactions and security.
Finally, financial institutions have also a bigger role to play. Before lending to any SMEs, they should be keen enough
to make SMEs understand the need for any business to adapt technology to sell its products and service, utilise its
workforce that has migrated to smaller towns and digitally market its product offerings and solutions. Therefore, it is
imperative that SMEs pivot their business models towards a more agile, digitallyenabled setup that makes them more attractive for lenders.