The digital revolution will play a significant role in poverty reduction in the Global South, particularly through its impact on Micro, small and medium-sized enterprises (MSMEs).
One study by the Bill and Melinda Gates Foundation found that in rural Bangladesh, the use of mobile money services was associated with a 42-percentage point reduction in extreme poverty. Another study by the International Telecommunication Union (ITU) found that for every 10% increase in mobile broadband penetration in the Global South, GDP growth increased by 1.54%.
The digital revolution has created newfound opportunities for MSMEs to grow and compete in the global marketplace. As technology continues to evolve, it is important for MSMEs to understand the power of digital technologies and to take advantage of the opportunities it presents.
Communication that is strategic, high quality, clear and compelling is an essential component for the success of MSMEs today. Effective communication can benefit MSMES in numerous ways. These include:
- Building and maintaining relationships: Effective communication can help MSMEs build and maintain relationships with their customers and suppliers. MSMEs can demonstrate their credibility and trustworthiness by keeping these stakeholders informed about the business’s performance and future plans. Ultimately, allowing them to establish and maintain long-term partnerships.
- Increased sales and revenue: Communication allows MSMEs to publicise the value of their products and services. Ultimately, this could lead to an increase in their customer reach and revenue, leading to increased profits.
- Compliance with regulations and standards: Many MSMEs are required to provide detailed financial information and regular updates on business performance. By clearly communicating this information, MSMEs can demonstrate their commitment to transparency and financial management, which can increase their chances of obtaining financing and other resources.
Despite the digital revolution, there are still many challenges that MSMEs in the Global South face, and more needs to be done to support business growth.
One of the main challenges for MSMEs is their lack of access to financing which can make it difficult for them to invest in new equipment, technology and other business assets. MSMEs can increase their chances of securing the funding they need to grow and develop their businesses by effectively communicating with potential lenders and financial institutions.
One of the key ways in which effective communication can increase an MSME’s chances of accessing finance is by improving their creditworthiness. By presenting their business in a clear and convincing manner, highlighting their strengths and addressing any potential weaknesses, MSMEs can appeal to potential lenders and increase their chances of being approved for a loan or other forms of financing.
Similarly, preparing clear reports of their financial performance and transparent information about their business can increase lender’s confidence in the business and increase the chances of securing financing. Furthermore, MSMEs can demonstrate their ability to use funds efficiently by communicating well with their lenders, which can increase their chances of securing further financing.
The private sector, governments and development organisations can support the communications capacity of MSMEs and reduce poverty by taking several actions:
1. Providing skills training and education: The private sector and governments can invest in programs that help MSMEs to develop the skills and knowledge necessary to use digital technologies and communicate effectively. This includes training in digital marketing, e-commerce and other digital tools.
2. Investing in digital infrastructure: Investment in digital infrastructure such as mobile networks and internet connectivity is essential for MSMEs to communicate with customers, suppliers and other businesses. Importantly, this can increase access to new markets and customers, which can help to drive growth and expansion.
3. Facilitating public-private partnerships: Governments can facilitate public-private partnerships between MSMEs and larger companies to provide MSMEs with access to the expertise and resources they need to improve their communication such as mentorship and business incubation programs.
4. Providing technical assistance: Technical assistance enables MSMEs to develop communication strategies and implement digital technologies. Assistance should include providing consulting services and offering skills training to help improve their communication capacity.
MSMEs play a crucial role in poverty reduction, and effective communication is essential for their success. As technology continues to evolve, the ability of MSMEs to communicate effectively will become even more important in reducing poverty.