Micro Small and Medium Sized Enterprises (MSMEs) have a vital role to play in the economic development of African countries. They are a vital engine in the African economy as they not only drive growth and create employment, they also spearhead innovation. In addition, MSMEs have the opportunity to leverage their agility to design and incubate new technologies and business models to build a better future (COMESA, 2020).
Exponential growth in scientific and technical knowledge provides unique opportunities for Africa to solve its critical challenges related to meeting basic needs, participating in the growing economy, addressing ecological and climate change problems and improving governance . African leaders have in recent years been placing increasing emphasis on the role of science, technology and innovation. Decisions taken (8th African Union Summit, 2007; 28th Meeting of the COMESA Council of Ministers, 2010) represent a clear expression of political will and interest in introducing specific reforms and actions to endorse the role of science and technology in regional development.
The COMESA Treaty under Article 100(d) calls on Member States to collaborate to promote ‘industrial research and development, the transfer, adaptation and development of technology, training, management and consultancy services through the establishment of joint industrial support institutions and other infrastructural facilities’.
COMESA Member States recognize the importance of science and technology in socio-economic and cultural development and agreed to cooperate in various fields as stated in the decisions of the 2010 COMESA Summit on Science and Technology Development.
The COMESA Science, Technology & Innovation (STI) strategy and implementation plan takes into consideration priorities underscored in the decision of the 2010 COMESA Summit on Science and Technology, reflecting the need for concrete projects that will deliver tangible results for the region in the context of regional cooperation in the field of science and technology. The strategy informs COMESA Member States in their future decisions. It provides guidelines on where to make strategic investments that strengthen regional cooperation, improve scientific and technological research capabilities and are relevant to other Science and Technology projects in the region.
However, despite the pivotal role played by businesses to the economy, the Corona virus disease (COVID 19) pandemic has had adverse effects on most economies, particularly on Micro, Small and Medium Sized Enterprises (MSMEs). A United Nations Economic Commission for Africa (UNECA) report titled COVID 19 in Africa: Protecting Lives and Economies states ’56 percent of the urban population is concentrated in overcrowded and poorly serviced slum dwellings (excluding North Africa) and only 34 percent of the households have access to basic handwashing facilities’. In addition, it states ’71 percent of Africa’s workforce is informally employed and that most of those cannot work from home’. This highlights Africa as more vulnerable to the effects of the pandemic (UNECA, 2020).
Clark Ke Liu in the Role of Micro-Small and Medium Enterprises in Achieving SDGs, explains that “micro, small and medium enterprises (MSMEs) are widely recognized for their important contributions to development by stimulating economic growth, creating decent jobs, eradicating poverty and improving livelihoods, especially in developing countries” (Liu, 2020).
According to the World Bank, Micro, Small and Medium Enterprises (MSMEs) play a
major role in most economies, particularly in developing countries. “MSMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. Formal MSMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal MSMEs are included.” The International Finance Corporation (IFC) estimates that globally, 74 percent of MSMEs are informal (Lopez, 2020).
Despite one of the greatest risks to the global economy in recent history being the COVID 19 pandemic, a recent survey conducted by McKinsey and Company reports that “nearly three of four executives also agreed that the crisis will create significant new opportunities for growth, although this varies significantly by industry” (Furstenthal et al.,2020).
The McKinsey and Company survey found that more than 200 organizations across industries and more than 90 percent of executives said, “they expect the fallout from COVID-19 to fundamentally change the way they do business over the next five years, with almost as many asserting that the crisis will have a lasting impact on their customers’ needs” (Furstenthal et al., 2020). Whilst noting that identifying opportunities emerging from the crisis is not equivalent to capitalizing on them, there is a case for innovation.
Some of the unexpected opportunities include accelerated digital transformation, streamlined processes, increased economic efficiency and faster turnaround time, and transformation in how business is done.
- RATIONALE AND OBJECTIVES OF THE STUDY
- Rationale for the study
Businesses, particularly Small & Medium Enterprises (SMEs) have an essential role to play, especially in developing countries, as job creators and social stabilizers, as well as sources of innovation. This enables SMEs to contribute both to poverty alleviation and the overall economic development process. Notwithstanding that majority of SMEs are still confronted with formidable obstacles when seeking to start or expand their businesses (especially those related to international trade), the IT revolution is providing SMEs with effective tools which they can use, in conjunction with appropriate government policy measures (United Nations, 2005).
A survey that was jointly developed and carried out by the African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (UNECA) and International Economics Consulting Ltd. provides insights on African businesses’ reactions and outlook to COVID-19 and is the first comprehensive survey on the Coronavirus disease (COVID-19) pandemic and its economic impacts across Africa. The survey looks at the impact of COVID-19 on businesses and trade, and identifies the challenges faced and the subsequent responses made by businesses. (The survey was administered online for one week, from 14 to 20 April 2020. The results are based on 337 responses and 210 fully completed questionnaires, with each respondent representing an enterprise that operates in 1 and/or all 54 African countries, and disaggregated as: 76 micro enterprises, 59 small sized enterprises, 42 medium sized-enterprises and 33 large enterprises.) A subsequent second-round of the survey was conducted, that also involved ECA Subregional office for Southern Africa (SRO-SA).
Both surveys confirmed the role of technology and innovation as a strategy that is used by businesses to address the impact of Covid-19. For example, they found that digital technologies allowed employees to remain in employment and allowed firms to maintain continuity in their business activities, therefore avoiding drastic reduction in capacity utilization by having their employees work remotely.
Further research has confirmed the role that technology and innovation plays in boosting the productivity of businesses, such as Chege and others in a research piece looks at the impact of technology innovation on firm performance in Kenya. They found that technology innovation influences firm performance positively and recommend that entrepreneurs should develop innovative strategies to actualize firm performance. Further, government policy should aim at improving ICT infrastructure; promoting small and medium-sized enterprises’ (SMEs’) technological externalities within the industry, and establishing ICT resource centers to support SME performance (Chege et al, 2019).
Notwithstanding, there is limited empirical knowledge on the role that technology and innovation has on MSMEs within the COMESA region in addressing the impacts of COVID 19, and how this in turn affects COMESA’s regional integration agenda, in addition to its intra COMESA trade.
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