Photo credit: Thirsty Mag
The future looks really uncertain for many businesses, as the COVID-19 pandemic still seem to be wreaking havoc on everything within its path. So far, small and medium-sized enterprises (SMEs) in Africa appear to be most affected.
According to the International Finance Corporation (IFC), SMEs represents 90% of all businesses in sub-Saharan Africa and creates around 80% of the region’s employment. So, one could imagine the long-term repercussions this crisis could have on African economies if no immediate support is provided to save SMEs.
With many countries already looking to fully reopen their economy as a desperate strategy to reduce the disastrous economic effect of the current crisis, there is serious need for many SMEs to reassess their business strategy and make necessary adjustments to better thrive in the post COVID-19 era.
Photo credit: PBS
Here are some business-impacting strategies African SMEs can leverage in order to revive their businesses:
1. Invest in Foreign Stocks and Bonds
It is obvious that a large number of SMEs have incurred huge losses as a result of long weeks of inactivity caused by the lockdown imposed on major cities across the continent. However, as business activities commences, it would be wise for those SMEs who are seeking to invest in stocks and bonds to secure foreign investments, because this would help to cushion the impact of rising inflation and depreciation of the Naira.
2. Get Loans (with reduced interest rate) and Renegotiate existing Loans:
In order to stay afloat, SMEs who are yet to repay loans which were collected from banks and other financial institutions should find ways to renegotiate the terms of repayment, especially if the existing terms would hurt the financial status of their businesses. Others who intend to secure fresh loans during this period, should opt for loans with reduced interest rates.
3. Leverage Modern Technologies
As the spread of the COVID-19 virus started gaining momentum, and lockdown were being imposed in major cities across Africa, a large number of SMEs found ways to continue operating through the use of modern technology, and this has helped to keep them afloat till this point. However, as economic activities are looking to fully commence in most of these regions, there is an urgent need for SMEs to fully incorporate modern technology into their daily activities, as this would not only help to improve their productivity but also provide them with the ability to adhere to the necessary health directives.
Additionally, in as much as these aforementioned strategies would go a long way in sustaining many SMEs through this crisis, financial support and donations from the government and other local and international organizations is also vital in deciding the fate of a large number of African SMEs. McKinsey’s Africa Division estimates that over $50 billion would be required to help African SMEs weather the storm created by the COVID-19 pandemic, but only $20 billion has been dedicated thus far, which shows that a lot of work still needs to be done, if we intend to save SMEs.
Photo credit: CRUZ511
Author Credit: Ima-Abasi Joseph Pius