What is the role of digitalization in a post-Covid world?

When the COVID-19 pandemic disrupted the livelihoods of millions of entrepreneurs last year, digitalization offered small businesses around the world a promising solution. In this Q&A, TechnoServe’s Global Entrepreneurship Director, Juan Carlos Thomas, speaks with the Executive Director of the Argidius Foundation, Nicholas Colloff, and Dalberg Advisors’ Global Knowledge Lead, Kusi Hornberger, about the future of digital technology for supporting entrepreneurs.

Photo: TechnoServe

Before the COVID-19 pandemic, organizations supporting small- and medium-sized enterprises (SMEs) carried out 24% of their support services in a digital format. By November 2020 – according to a new report from the Argidius Foundation, the consulting firm Dalberg, and the Aspen Network of Development Entrepreneurs (ANDE) – 72% of services were digital.

While COVID-19 accelerated the rate of digital transformation for businesses and organizations of all kinds last year, the question now is how to carry forward the best lessons from this rapid process.

COVID-19 accelerated the pace of digitalization for SMEs worldwide. How can we use digital technology to help these businesses grow?

Digitalization – the strategic use of digital technologies – offers a promising avenue toward business growth as small businesses in low-income countries rebuild and recover from the impact of COVID-19. The newly-released guidebook from the Argidius Foundation, Dalberg, and ANDE lays out the best ways to help small businesses grow, adapt, and build resilience through digitalization.

The report highlights key considerations to help small businesses determine the right approach to digitalization, such as the following:

  • Should a small business re-integrate in-person delivery after the pandemic or maintain a digital focus? Are remote services even the best way to reach some clients?

  • To what degree will this digitalization trend continue?

  • For businesses that decide to keep providing services digitally, what are the best ways to ensure they are effective?

Q&A: How digitalization can help small businesses build resilience and grow

1. Juan Carlos Thomas: How was the SME sector in developing countries affected by the COVID-19 pandemic, and what impact did that have on the economies around them?

Nicholas Colloff: Across the geographies in which we work, some businesses were placed in mortal peril, while others continued to flourish or even accelerate. It all depended on the sector, the security of the supply chains, and the severity and length of lockdowns as to how those percentages played out.

It’s also important to acknowledge the creativity and flexibility of entrepreneurs and whether and how well they were embedded in ecosystems of support. Our enterprise data for 2020 as a whole shows that businesses survived better than we had expected, and job creation was still net positive (if much slower).

Many employers had cut employees’ hours rather than shed jobs. We also noticed that women entrepreneurs were experiencing more challenges than men.

2. JCT: The Argidius Foundation works with organizations supporting SMEs around the world, many of which had to adapt their programming to work with SMEs remotely during the COVID-19 crisis. What were some of the main ways you saw organizations adopt new digital strategies?

NC: Many, though not all, doubled down on their existing clients, utilized the simplest of available technologies — WhatsApp, Teams, or Zoom — and flexibly adapted their interactions to focus on the critical challenges of controlling costs, ensuring supplies, and using digital means as enterprises to service their clients.