Although different sectors were exposed to and impacted in diverging ways to the extensive changes of the COVID-19 pandemic, Small and Medium Enterprise (SME) confidence across most sectors is on the rise, according to the latest research by Mastercard.
The inaugural Mastercard Middle East and Africa (MEA) SME Confidence Index found that 74 per cent of SMEs in construction and manufacturing are optimistic about the next 12 months. Confidence levels were highest among businesses in retail, closely followed by food, beverage, and entertainment. Construction and manufacturing had the best forecasts, with 76 per cent of SMEs projecting revenues that will either grow or hold steady. Half (50 per cent) are projecting an increase.
Access to training, credit, and data key for future growth
As many regional economies gradually enter the normalization and growth phase, and social restrictions continue to ease, small and medium-sized businesses in the MEA region’s construction and manufacturing sector have identified upskilling staff (56 per cent), easier access to credit (56 per cent) and better data and insights (52 per cent), as the top drivers for growth. This highlights the opportunities for small businesses that arise from both internal transformations as well as industry regulations and trends.
Making sure that SMEs have all the support they need to go digital and grow digital is a key focus for Mastercard. The company works closely with the government, financial organizations, and the wider business community to create opportunities for the small business sector.
Solutions that go beyond getting paid
For many small businesses, reducing their dependence on cash through digital payments acceptance has played a major factor in being able to get paid and maintain revenues.
Mastercard offers technology, data-driven insights, consulting, and predictive analytics solutions to empower businesses to acquire new customers, enhance customer loyalty and improve operations.
Mastercard has pledged $250 million and committed to connecting 50 million micro, small and medium-size businesses globally to the digital economy by 2025 using its technology, network, expertise, and resources in support of the company’s goal of building a more sustainable and inclusive digital economy. As part of these efforts, Mastercard is focused on connecting 25 million women entrepreneurs.
“As manufacturing and construction businesses continue to build back better through a combination of digital transformation and people development, they are also encouraging other SMEs in this sector. At Mastercard will look forward to a seamless continuation of supporting the SME ecosystem, providing the payments technology infrastructure and wider business solutions that will spur wide, inclusive growth of the digital economy,” said Amnah Ajmal, Executive Vice President, Market Development, Middle East and Africa, Mastercard.
Rising costs and maintaining staff among concerns
When asked about the main thing that keeps them up at night, 54% of regional SMEs in construction and manufacturing mentioned the challenge to maintain and grow their business was their top issue. Looking at concerns over the next 12 months, six in ten (60 per cent) identified the rising cost of doing business, while 47 per cent cited access to capital.
From an operational perspective, concerns for the next year include maintaining current staff levels (47 per cent), training and upskilling staff (44 per cent), finding the right talent for new needs (39 per cent) and mental and physical wellbeing (39 per cent) – highlighting the growing trend around the development of people as a key theme for small business success.
Benefits of a cash-free economy
Growing confidence levels in digital as a business imperative are tied to a deeper understanding and wider recognition among SMEs of the advantages that result from a growing digital economy. When asked about the biggest benefits of a cash-free economy to their businesses, SMEs in construction and manufacturing stated the ease of not processing cash (48 per cent) and more convenient payment of suppliers and employees (47 per cent).
The area where most construction and manufacturing businesses in the region say they now need support, is in help managing or upskilling teams (55 per cent). SMEs in this sector also want access to a wider range of financial services (55 per cent) and effective regulatory support from the government (54 per cent).
As consumer trends evolve in a post-pandemic world, businesses must adapt and prepare for the future. Late last year, a Mastercard study showed that 73 per cent of consumers in the Middle East & Africa are shopping more online than they did since the start of the pandemic. Furthermore, new payments methods are gaining ground and 9 in 10 shoppers would consider making a purchase with an emerging payment technology over the next year, including cryptocurrency, biometrics, contactless, QR codes, digital wallets, and wearables.
Consumer passion for the environment is also growing, with 7 in 10 believing it’s more important for businesses to do more for the environment, and 25 per cent in the Middle East saying they would stop buying from businesses that do not behave sustainably.