After more than a year of Covid-19 and associated levels of lockdown, the Small Business Institute (SBI) has been studying more than 100 policy documents, research and media reports related to digital transformation to understand its role in the survival and future growth of small businesses, job creation and the country.

SBI CEO John Dludlu says it is clear that South Africa needs to embrace the future and fast.

“From all that we read and the case study examples of small, medium-sized and microenterprises (SMMEs) which were able to continue to trade by using digital tools or building digital-first businesses, an urgent commitment to digitalisation is South Africa’s best hope, as much for small towns and rural areas as urban centres.”

SBI on March 10 released its second paper in a series of papers to be issued in coming weeks, which makes the case for digitalisation and the benefits it offers, including innovative, targeted, appropriate and efficient public service delivery; greater inclusivity and equality; better and cheaper products; and employment opportunities to make and distribute the related goods and services.

“We looked at the challenges, including the inadequate skills base for small as well as big business; poor digital infrastructure; uncertain, expensive power supplies; a government locked in the Third Industrial Revolution; policy confusion resulting from too many cooks in the kitchen; the oft-cited heavy hand of inappropriate and too much regulation; and the inability to put our taxpayer money where government’s mouth is; and the most recent Budget's diversion of allocations from the departments overseeing South Africa’s shift to the Fourth Industrial Revolution (4IR),” Dludlu explains.

He adds that corruption contributes enormously to wrong funding priorities, which could be minimised were citizens able to monitor procurement and spending decision-making in real time, online.

“For if the 4IR is characterised by its use of data and its velocity, scope and impact, it is equally about responsive, citizen-centric governance.” 

SBI has also documented successes. The institute believes the real heroes of this story are the innovative entrepreneurs who, in digital or data-related industries, developed tech-based products or services like medical or contactless payment apps, or new uses for ‘wearables’, part of the Internet of Things wave gathering pace.

Others who reacted quickly adopted new ways to sell, or manage their staff, operational and financial information using digital technologies, products such as cellphones, or services like social media platforms and the cloud.

While we found pockets of fruitful endeavours by government in, for example, research and development or at the Council for Scientific and Industrial Research and on the National Treasury’s Vulekamali website, most analysts assessing government’s readiness for the 4IR delivered “abysmal report cards”, the SBI notes.

“Continuous innovation is central to economic prosperity. If we embrace it with urgency and purpose, and not just by publishing strategies or regulations to try and govern it inappropriately, our economy will revive, jobs will be created and businesses will become more productive in a virtuous cycle,” Dludlu says.

Because SMMEs were failing before Covid-19, SBI argues that South Africa cannot and should not go back to the old normal. To successfully empower a nation ready to leap ahead will require an urgent understanding of how best to unleash entrepreneurial innovation, the institute notes.

It will require a government willing to lighten the heavy hand of over-regulation and relinquish the idea of “controlling” the 4IR or how businesses embrace its tools. “This while government itself must dip its toe into the future by modernising its approach to serving the public”.

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The SBI suggests that government prioritises long-term investment in digital and relevant softer education and skills development for students, the employed requiring re-training and the teachers who teach them.

The institute also recommends building the requisite and affordable digital infrastructure to achieve economic advancement and inclusion, particularly by letting the private sector help and incentivising them to do so.  

The SBI believes that public-private partnerships can work well in respect of building “govtech” solutions to e-governance, innovative institutions and the execution of digitalisation.

The institute also wishes to see rapidly accelerated procedures for green lighting large-scale renewable power projects and more commitments to responsive, citizen-first governance.

The SBI says it would do government well to ensure that procurement procedures are conducted online and transparently, to enhance efficiency and minimise corruption.

Moreover, it says government ought to constrain the regulatory environment to fewer and better laws with clear policy objectives and targets, paying heed to a regime that is conducive to small business needs and abilities.

The institute adds that regulation should not simply require compliance, but should promote innovation and competitiveness, or entrepreneurship, job creation, digital platforms for e-commerce proliferation and mobile payment options, digital financial services, the adoption of emerging technologies, harmonising and easing cross-border trade and holding oneself accountable.

Lastly, the SBI wants government to ensure that the views and concerns of small businesses are more effectively articulated in decision- and policy-making structures.

“Policy-making and regulatory design needs to be more responsive to the needs of small business,” Dludlu laments.