Farhad Suleman, CEO of Simpli Connect.

SMEs make up a huge proportion of South Africa’s business landscape and employ a large part of the population. Nevertheless, SMEs along with other businesses, big and small have been impacted by the COVID-19 pandemic.

According to research conducted by World Wide Worx titled ‘The Digital Corporation in South Africa’, a third of respondents do not see their workforce returning to a physical office while the remaining 65% of respondents feel workers will return to the office. The significance of work as we know it changing for as much as 35% of respondents and although less than 65% it is still significant.

Whichever way you look at it, life and work will not return to normal and, in fact, our ‘new normal’ certainly is different to what we all know and will therefore result in a hybrid workforce.

According to WeWork “The hybrid workplace model is a type of work environment that combines aspects of remote working and in-office working.”

Looking at both sides of the coin, SMEs as employers had to act fast to enable a remote workforce during the onset of the pandemic and employees of SMEs had to quickly pivot to being remote and physically able to embrace technology without being in the office.

Government acknowledges the importance of SMEs in the economy

The South African government indirectly acknowledged the importance of SMEs last year when the National Small Enterprise Amendment Bill 2020 was gazetted. This allows SMEs to have access to legal support and entailed the establishment of the Small Enterprise Ombud Service to ensure justice for SMEs who are also vulnerable to exploitation. This is a positive move by government and recognises the important role that SMEs play in terms of employment and the role they will play in the economic recovery in South Africa.

SMEs are lapping up more of the turnover pie in South Africa

According to Statistics South Africa SMEs contributed to 32% of total turnover (R10.5-trillion) of formal businesses in South Africa in the 2019 financial year, with large organisations contributing to the balance. However, what is noteworthy is the fact that small businesses have been gaining traction and are increasingly taking a larger share of the pie year on year, increasing from 16% of total turnover in 2013 to 22% in 2019. Medium-sized businesses increased turnover by 8,4% per year, and large business by 5,4% on average, year on year.

SMEs are agile

Having said that SMEs are vulnerable in one breath, I also need to acknowledge the ability of SMEs to survive and thrive in times of change. Due to their smaller size SMEs are often more agile than large corporates that are frequently encumbered by lengthy processes and procedures before any changes can be made.

The ability to adapt means that SMEs are well placed to adopt new technology and this encompasses more than just connectivity. This new ‘elastic workplace’ plays right into what SMEs are able to do well and that is quickly pivot in order to survive.”

SMEs are ready to adopt new technologies

Business focus has shifted from being merely connected to being productive and providing value to customers. SMEs can take advantage of the opportunities that digital transformation offers. Accenture reinforces this view saying that ‘SMEs are growing at rates not seen in decades and employing more people than ever before.’ The report goes on to say "SMBs (SMEs) are also projected to shift their connectivity focus to premium connectivity such as 5G and Information and Communications Technology services by 2024."

Re-purposing their current footprints

Through connectivity many SMEs can relook at their physical footprint and turn to focus on their digital footprint. This means that savings made from, for example office rentals, can be used to fund a hybrid working model and a digital presence, like a website or, better still, an e-commerce site. With a digital presence, the world is the limit. By driving digital adoption SMEs can not only benefit their customers and reach a larger potential target market, but they can also transform how they interact with their employees. Many SMEs in South Africa have plans to become fully remote and have started building digital plans and ambitions aligned to their roadmap of expansion.

A knock-on effect of this transition is that employees are in a position to settle wherever they want.

The term ‘semigration’ describes the recent phenomenon of people moving out of the major business hubs of South Africa to places they deem more attractive to live, like coastal towns. This is largely enabled by the advancements in tools that support hybrid-working which effectively remove proximity to work being as a requirement of where to live.

According to Yael Geffen, chief executive of Lew Geffen Sotheby’s, “Towns like Knysna, Plettenberg Bay and Mossel Bay have seen a 56%, 69% and 45% jump in sales volumes respectively for the 12 months ending February 2021. But more recent spikes have been recorded in other regions like Noordhoek (37%) and False Bay (86%) this past year as part of a clear resurgence of semigration.”

Being in a remote area no longer matters

Taking on a digital presence is squarely determined by the industry that the SME is in and a good example of an industry that is able to embrace digital transformation, is retail. SMEs in retail can augment their digital footprint and can make use of last mile logistics to distribute their products nationally and internationally.

Where an employee works is immaterial with connectivity becoming more accessible in South Africa, not only through fibre, but also through satellite connections for remote areas. Over and above this, most mobile operators now have extensive coverage across major metros in South Africa and they are now expanding their fixed wireless access networks into second and third tier towns, meaning wireless connectivity is expanding its footprint in South Africa too.

Affordable connectivity is not just a challenge in South Africa, it is a global challenge, and is why companies like StarLink, Elon Musk’s brainchild, are investing in technologies like low orbit satellites that can provide broadband satellite internet access to most of earth. StarLink is currently rolling out its initial beta service and is continuously expanding reach across the world.

With all the hype around mobile connections and 5G, which is distributed in smaller cells, the mega-constellation of 42,000 satellites that StarLink provides marks the beginning of world wide connectivity and hopefully the lowering of cost, making connectivity more widely available.

5G is currently only available in metros and tier one towns as we can already see and it is also relatively expensive and tailored for a very niche market. Hopefully companies like StarLink will help to bridge the digital divide.

How South Africa stacks up

South Africa is lagging behind ‘first world countries’ globally when looking at its roll out of fibre. However, South Africa is not considered developing from a broadband perspective. New partnerships on the horizon bode well for South Africa.

The South African government committed to striving to achieving it target of 80% of the South African population having access to the internet by 2024. This was formalised in the performance agreements signed by president Cyril Ramaphosa in December last year.

According to the GSMA’s Mobile Connectivity Index only 49% of the world has access to mobile Internet (approximately 3.8 billion subscribers). South Africa has a Mobility Index Score of 60.1 and is considered to be a “transitioner” however much still needs to be done in rural areas in South Africa and across the developing world.

Examples of bringing internet and ICT access to rural areas are the Solar Learning labs which can be seen in South Africa.

Hybrid work is a reality and SMEs who are able to, can certainly take advantage of this to increase their potential virtual footprint and market share. With the roll out of connectivity across the country and aggregators providing bespoke solutions to SMEs in terms of connectivity, there is nothing stopping SMEs from growing virtually in the future and taking a larger share of the turnover pie.

*In the second episode of the Simpli ConnectED Podcast Series, Farhad Suleman chats with Mohammed Manjra from Zoom Fibre and Tanya Dreyer from Simpli Connect. This discussion looks at how connectivity forms the foundation of a successful hybrid workplace. Mohammed demystifies FTTH (fibre to the home) Vs FTTB (fibre to the business), the difference between ISP’s and Infrastructure providers and the importance of understanding your SLA. Tanya delves into collaboration tools, customer support and helping mitigate connectivity failures if your FTTH / FTTB goes down.