The surest route to economic recovery and prosperity in our new normal, post COVID-19 world is to support local enterprises, says Karl Westvig, the CEO of Retail Capital who specialises in SMME funding.
He believes all the pieces are in place to kickstart South Africa’s stalled economy.
Westvig says the COVID-19 pandemic has heightened South Africa’s inequality and socioeconomic challenges, but that the country stands at the “cusp of great opportunity.”
“In order to understand the potential we can unlock, one needs to take a step back and consider a few facts. The first is that SMEs are a huge source of employment for South Africans, because by all estimates they make up well over 95% of businesses in the country. The health of SMEs are therefore vital to South Africa’s GDP and integral to any economic turnaround.”
Westvig says small businesses bore the brunt of the pandemic, but points to a recurring pattern in those businesses that either survived or thrived during the lockdown.
“They evolved rapidly. Where a door shut, they immediately opened another. Businesses that were built on hot food suddenly became proficient at cold meals, while importers of Chinese goods sourced local goods – all the way from lights, to clothes, to gym and exercise equipment.”
Therein lies a blueprint to add another tool into our economic recovery toolkit. Buy local, he says.
In our network of businesses, Westvig says, “we noticed that those which were able to pivot and support local – both upstream and downstream, suddenly found themselves able to service their own customers, but also reignite the prospects of South African suppliers. With a newfound demand, many of these producers were able to rise to the challenge.”
He adds that while the opening of borders is an essential component of a free and open economy, it need not be the death knell of local industry.
“By supporting local wherever possible, we recalibrate our lens to see the bigger picture. Our prospects are all intricately linked – if your side of the ship starts taking on water, chances are it is only a matter of time before mine does too. If the ship takes on too much water, we all sink together.”
One of the forced outcomes of the pandemic has been the need for everyone to embrace digital transformation in some form or another, says Westvig, adding that the automation of business processes such as HR or accounting, has allowed SME business owners to move away from being jacks of all trades and to focus on the core tasks of running and growing their businesses.
“Digital capabilities also mean that businesses can find one another, compete with one another and very importantly, find and listen to their customers.”
Westvig, whose business offers funding and asset finance for small businesses in South Africa, says the single biggest obstacle to SMEs scaling to sustainable levels is lack of access to funding.
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The most appealing side effect of an economic recovery built on the “foundation of a buy-local mindset is resilience.”
“Resilience in the face of economic dips, resilience in the face of another global catastrophe and resilience in the face of very stiff competition from international players and their exports to our shores.”
Westvig says Heritage Month offers the opportunity to reflect on how far we have come as a country.
“Six months ago we had no idea how badly this pandemic would hurt us, or what the aftermath would be. Like all hardships, it came at a great price to families who lost loved ones and businesses, but it also brought communities together.”
South Africans, he says, must grasp this legacy of pulling together into 2021 and beyond by “thinking creatively and supporting the driver of our country’s potential prosperity: South African SMEs.”