Switch off the Bat-signal because no-one’s swooping in to save us. If we’re going to get through the looming economic crisis, we’re going to have to do it ourselves. It’s time to embrace our ubuntu economy.
Globalisation as we know it is on hold. That means no more relying on outside investors and low-cost imports if we are to see a return on our R500-billion stimulus package.
The economic impact of COVID-19 has exposed just how vulnerable the South African economy is due to its reliance on global markets. Even before the virus arrived on our shores, businesses struggled with stock shortages due to global supply chain disruptions.
It’s going to get worse before it gets better. Supply chain disruptions are expected to continue for the next year or two, which will drive up the cost of importing into Africa due to delays and decreases in availability. Our biggest sources of foreign direct investment are facing their own economic slowdowns, and our current investment grade isn’t exactly sweetening the pot for international investors.
Turning Ubuntu into Action
One of the more positive things we’ve seen come out of the pandemic is a renewed sense of Ubuntu (I am because we are). A movement has emerged to support local businesses through lockdown. From marketing encouraging South Africans to ‘buy local’, such as Volkswagen’s recent campaign, to UCOOK’s virtual cook-alongs aimed at raising awareness and funds for struggling restaurants, players from all industries are coming together for a greater purpose.
It’s a great call to action, but it will need to go deeper than a slogan. Proudly South African isn’t just a feel-good mantra. It’s a declaration of intent to bolster local capabilities throughout the value chain. It’s the foundation for a more resilient and inclusive economy, based on shared resources and services.
Forget “Think global, act local”. We need to adopt a ‘Think local, act local’ mind-set that uses the constraints of the pandemic to lessen our reliance on global markets and supply chains. Now is the moment to make the bold moves – investing in local businesses, re-imagining procurement, and making smart partnerships – that will make the sharing economy a reality.
A Winning Strategy
It’s no coincidence that the agricultural sector – a bedrock of local production and domestic output – has been one of the industries less affected by the lockdown. Jobs have been steady and exports are expected to increase over the next year.
Other industries are following in the footsteps of agriculture by investing in local infrastructure. DisChem has begun outsourcing the production of its staff uniforms to a small manufacturing incubator in Kwa-Zulu Natal. Standard Bank has partnered with the Small Enterprise Finance Agency to help spaza shops purchase stock through government funding at wholesale prices. Even businesses such as Unilever that manufacture most of their products locally are seeking more local supplier partnerships.
All signs are that local capital will have a much larger role to play in reducing our reliance on imported goods. Sanlam, Ninety-One, and Patrice Motsepe are just some of the players that have announced investment funds aimed at supporting local businesses or strengthening infrastructure. Platforms like Investmint are also making it easier for businesses that need capital to connect with investors.
The lesson is clear. Investing in local supply chains – whether directly or through partnerships – allows you to own more of the customer value proposition, which leads to better pricing and greater accountability over the quality of service. It’s a win-win scenario, not only for small local entrepreneurs but the sustainability and relevance of your business as a whole. And with the reduced strength of the rand, now is the perfect time to divert money into local businesses where your investment can go further.
Ubuntu goes Digital
South Africa has never lacked entrepreneurial spirit. Opportunities for local investment and partnerships for growth are everywhere. The challenge facing most organisations is finding them. Thankfully, the digital acceleration driven by lockdown is allowing us to be smarter about finding the right partners and customers.
Just look how many retailers have begun partnering with digital-first businesses, not only to enhance their fulfilment capabilities such as Pick n Pay and Bottles, but also to introduce new offerings. By teaming up with Fruitspot and Makro, Netflorist was able to introduce a grocery delivery service within less than a month of lockdown, greatly increasing its relevance at the right time.
With e-commerce enjoying its moment in the sun, expect to see many local businesses turning to storefronts like Shopify, Takealot and Hello Pretty to reach a wider market. We’re also seeing the launch of various digital marketplaces as a response to COVID-19, such as Telkom’s Yep, aimed at entrepreneurs, and Proudly SA’s rsamade platform, dedicated to showcasing local businesses.
Meanwhile, businesses of all sizes are using digital platforms to share their resources and knowledge. Visa has launched an online merchant platform providing SMMEs with tools and information on how to start and build their business. Companies like Airbuy are offering free resources aimed at helping small businesses build online storefronts. Start-up Teambix has created a platform that allows businesses to “lend” inactive staff to other companies for extra revenue.
This is what it looks like when ubuntu goes digital. More value, more sustainability, and more opportunities for growth. COVID-19 has reminded us of the importance of collective action, now it’s time to use the tools and technology at our disposal to enable more meaningful business decisions.
My question to you is what are you doing to think and act local? What assets can you lean on to help grow your industry or community? In which aspects of your business are you able to create more value if you pool resources with others? Are there any moves you can make now that will give you greater control over your value chain in the future?
We’re in it together so let’s embrace our shared power.