4 roles governments can play to help small businesses flourish in a post-COVID world
By Pavithra R
Small businesses are the backbone of the economy and remain essential to global economic growth and employment. Mastercard recognises them to be the lifeblood of communities, and have put forward collective determination to keep them afloat. But small business owners need support on both sides of the checkout counter.
Governments can play a vital role and can employ various policy tools to support these businesses. The article outlines 4 roles governments can play to strengthen resilience, with focus on business-to-business (B2B) small businesses. These are:
1, Conduit for and enabler of working capital and funding
This role has been especially important amid COVID-19 to keep small businesses going. By easing cash flow burdens and removing barriers that hinder the ability to receive capital, particularly for women business owners and entrepreneurs of color who have been hit disproportionately hard, governments can help businesses operate on a day-to-day basis. Many B2B businesses need support for basic digitalization efforts, or risk being shut out of the global opportunities.
As small businesses become increasingly digital and as cybercriminals increasingly see them as targets, governments can ensure a safe and secure operating environment with regard to cybersecurity, trust and transparency. For example, free or subsidized cybersecurity tools would make them far less vulnerable, not to mention safeguarding the data of their own customers and consumers.
There are many financial and digital tools out there, but small business owners are already overburdened with the task of keeping their doors open and may not be aware of them. Governments can create opportunities for connecting entrepreneurs to one another for knowledge sharing and business growth.
4, Convener and connector
Everyone has a stake in the vitality of small businesses. Governments can bring together and incentivize other players, including private companies, non-banking FIs, development FIs and non-governmental organizations, harnessing their collective expertise to support cash flow management, capital and digital services to B2B businesses.
Governments can also build connections and dialogue with trade associations to understand small and medium B2B business pain points on a deeper level and can build a broader ecosystem of support alongside trade associations, with the multilateral organizations and with other governments.