A logo is pictured on the headquarters of the World Trade Organization (WTO) in Geneva on June 2,2020. Picture: REUTERS/Denis Balibouse
A logo is pictured on the headquarters of the World Trade Organization (WTO) in Geneva on June 2,2020. Picture: REUTERS/Denis Balibouse

Internet-based trade will be crucial in assisting small business to overcome disruptions caused by Covid-19, the World Trade Organisation (WTO) said in new report published this week.

While e-commerce is seen as a key springboard for businesses during and after the health crisis, in SA, the government previously limited internet-based trade for most of the strict lockdown, citing — among other concerns — unfair competition. The limitation was subsequently lifted following pressure from industry and political parties.

The global trade body said building resilience would be critical to helping small businesses face future economic downturns. It said e-commerce, for instance, could help overcome damaged supply chains by tapping into a wider range of international buyers and alternative suppliers.

The global Covid-19 pandemic has halted economic activities in many parts of the world, with governments imposing lockdowns to curb infections. Already, millions of jobs have been lost worldwide with small players, especially in the tourism, travel and hospitality sectors, hardest hit.

The WTO highlights that support for small businesses will be crucial for economic recovery. It says micro, small and medium-sized enterprises are the backbone of many economies, representing 95% of all companies worldwide and accounting for 60% of employment across the globe.

The trade body said Covid-19 had highlighted the importance of the internet and e-commerce to mitigate the effect of the pandemic, not only on people’s lives, but on economic activity as well.

It said a handful of WTO members had introduced measures meant to incentivise medium and small enterprises to adopt information and communication technologies to improve their resilience against economic downturns and help them diversify their value chain partners.

Governments have introduced a wide range of urgent stimulus and backstop measures for businesses, and especially for small enterprises. These measures, which are often time-limited, mostly include direct and indirect liquidity support meant to address the cash flow issues.

Beyond support for overcoming cash flow problems, some WTO members have also introduced measures to expand trade opportunities for small businesses. These trade-expanding measures essentially comprise customs-related processes, such as the streamlining of customs procedures or the reduction of customs duties, in particular on medical supplies and agricultural products.

According to WTO, a few governments are also supporting the supply of transport services for some of these products, or access to standards related to Covid-19 essential products. Some governments have also introduced trade-expanding measures applicable to all products.

The Australian International Freight Assistance Mechanism, for instance, provides government-led freight flights for perishable agriculture and fish products, with return flights bringing back vital medical supplies.

The WTO said small enterprises were particularly exposed to the Covid-19 pandemic’s economic effect because of limited financial resources and borrowing capacity, and because of their disproportionate presence in economic sectors affected by social distancing measures and transport disruptions.

“To limit the impact of the current crisis on [small and medium enterprises] and to build their resilience, it is critical that [they] have better access to regulatory and market information and affordable trade finance, as well as to streamlined customs procedures and requirements. Greater use of digital tools and e-commerce would also benefit [such companies],” the WTO said.

phakathib@businesslive.co.za