Small and Medium Enterprises (SMEs) play a critical role in economic development by creating employment and tax-generating avenues for the population and governments. They form both forward and backward linkages for manufacturing and services. Across the global south, the Small and Medium Enterprises hold most of the economic activity that creates employment, market, and tax revenues. Many of them are informally run but continue to formalize.
The Covid19 pandemic led to the closure of most businesses while others were forced to downsize when supply chains were hugely disrupted and in most cases cut off. Inputs and products couldn’t move to where they were needed because of the excruciating lockdowns. Many SMEs were dependent on telephone services to move inputs and products to wherever they were needed.
A May 2020 report on the Impact of COVID-19 on Ugandan MSMEs by the Ugandan Government in collaboration with the United Nations Capital Development Fund (UNCDF) among other partners, stated that Ugandan companies are fragile and have a relatively low cash flow coverage. Findings showed that only about 15% of the 1,140 surveyed companies could sustain more than three months of operation on their current cash flow. Others must take adjustment measures to keep their profitability at a level that would allow their continued operation.
The findings, among other factors, compelled many businesses to rethink their operation models so as to meet their financial objective amidst the economic turmoil. This required employers to provide their staff with tools like; laptops, internet, or desktops that would enable them to operate effectively and efficiently remotely.
At the start of 2022, Uganda opened its economy after 2 years of lockdown. The economy reopening presents enormous opportunities for the country’s socio-economic growth. However, we cannot overlook the fact that amazing business ideas emerged during the lockdown since businesses needed to swiftly adapt to then the new normal.
One such business is Ella Clear Foods Uganda in the hospitality sector. This small enterprise was forced to rethink its business approach when it was hit by the pandemic. The proprietor of Ella Clear Food, Ms. Catherine Nakatudde used WhatsApp during the lockdown to deliver workers’ meals in Kampala City. Currently, Catherine employs over five personnel and many others in the food supply chain. It’s such stories that make initiatives like Airtel’s Uganda Needs More of You important to their existence because they provide platforms on which to showcase successful and agile businesses to potential partners that can help scale them and power their growth further.
Today, the internet is a cost-effective tool that makes SMEs more productive and profitable because it is a key driver of communication. Within the appropriate communication channels in place facilitated by internet connectivity, business owners can continuously dialogue with customers and prospects, which in turn, opens up vast opportunities at relatively low costs.
The Uganda Communication Commission (UCC) report for the 2021 third quarter showed that internet subscriptions crossed the 22 million mark for the first time in our history, translating into a broadband penetration rate of 52%. Before the pandemic internet subscriptions were standing at 15.1 million in as per the 2019 UCC quarter 2 market report.
The transformative power of technology, supported by a reliable and affordable 4G service offered by local telecommunication firms like Airtel Uganda, facilitate and create an environment that champions the growth of digital-based services for business operators, and the economy as a whole.
For sustainability, SMEs need to adapt and incorporate innovative channels in their service offering so that they favorably compete in the market. These innovative approaches range from social media marketing, digital service delivery, and digital financial transactions, among others that guarantee business growth in a digital era like what we are witnessing today.
The author is the Ag. Marketing Manager, Brand and Communications, Airtel Uganda.
