Small and micro lenders around the world have taken the digital leap after the coronavirus pandemic. Still shuffling papers and relying on outdated systems, they were forced to change in order to survive. But some of their clients, the small businesses that are the backbone of the global economy, have failed to do so.
âAt the heart of this crisis are millions and millions of small and micro-businesses that have closed their doors or are simply struggling to stay afloat,â said Beth Hurvitz, senior vice president and global head of business. social impact at Visa, at the recent Concordia summit during a roundtable titled âPromoting digital equity to ensure a sustainable economic recoveryâ.
âThese companies are the backbone of the global economy,â added Hurvitz. “They represent 90% of companies, they represent 50 to 60% of global employment and are disproportionately affected by the pandemic.”
The pandemic has widened the global wealth gap, causing extreme global poverty to rise for the first time in 20 years. A network of nonprofits, governments and private companies strive to harness technology to improve not only digital equity, but economic equity as well.
“One of the factors was limited digitization. If you can’t do business digitally in the deadlocks, you just can’t do business,” said Hurvitz who spoke alongside Michael Schlein, chairman and CEO of the nonprofit Accion, and James Scriven, CEO of IDB Invest, on the panel.
Among other measures aimed at giving a boost to small businesses, Hurvitz highlighted Visa’s efforts to âdigitally empowerâ small businesses by helping them accept electronic payments, for example. The company said in June it had connected 16 million small and micro businesses, more than 30% of which towards a target of 50 million targeted by Visa.
It’s a transition that is taken a bit for granted in the developed world. The cost of facilitating digital trade – and the psychology of changing business models – can be a challenge.
âMuch of the work is about the digital transformation of small banks and microfinance institutions that are trying to serve the base of the pyramid, and in general, they are way too greedy on labor and paper, and have under-invested in technology, “Accion’s Schlein told the panel.” Before the pandemic, the notion of digital transformation of institutions was kind of nice to have, and now it’s urgent. “
Scriven from IDB Invest highlighted the use of technology as a tool to promote inclusiveness.
âTechnology is not an end in itself,â he said. âFor us in the development space, it is a means of development. When we look at technology, we look – what is the purpose of technology, in our case, to better rebuild our region and our world. “
Julie Hyman is the co-host of Yahoo Finance Live, weekdays 9 a.m. to 11 a.m. ET. Follow her on Twitter @juleshyman, and read his other stories.
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