Mastercard MEA SME Confidence Index: 78% of SMEs in Retail Across Middle East and Africa Optimistic About Future Growth

  • 78% of SMEs in region’s retail sector are optimistic about the next 12 months, according to Mastercard MEA SME Confidence Index
  • SME confidence levels were highest among businesses in retail, ahead of other sectors, like food and beverage, entertainment, construction, and manufacturing
  • Research identified key areas with the greatest potential for growth with half of SMEs in retail projecting an increase in revenues in the next 12 months

Although different sectors were exposed to and impacted in diverging ways to the extensive changes of the COVID-19 pandemic, Small and Medium Enterprise (SME) confidence across most sectors is on the rise, according to the latest research by Mastercard.

The inaugural Mastercard Middle East and Africa (MEA) SME Confidence Index found that 78% of SMEs in the retail sector are optimistic about the next 12 months. Confidence levels were highest among retail businesses, slightly ahead of other sectors, like food and beverage, entertainment, construction, and manufacturing. In addition, 70% of SMEs in retail are projecting revenues that will either grow or hold steady. Half (50%) are projecting an increase. 

Access to skills, digital payments, and data key for future growth

As many regional economies gradually enter the normalization and growth phase, and social restrictions continue to ease, small and medium-sized businesses in the MEA region’s retail sector have identified training and upskilling staff (55%), acceptance of digital payments (49%), better data and insights (49%), and easier access to finance (49%) as the top drivers for growth. This highlights the opportunities for small businesses that arise from both internal transformation as well as industry regulations and trends.

Making sure that SMEs have all the support they need to go digital and grow digital is a key focus for Mastercard. The company works closely with the government, financial organizations, and the wider business community to create opportunities for the small business sector.

Solutions that go beyond the cash register

As part of its support to the retail sector, Mastercard offers technology, data insights, consulting, and predictive analytics solutions to empower retailers to acquire new customers, enhance customer loyalty and improve operations. Mastercard spend insights offer retailers a 360-degree view of their shoppers, with its platforms and services translating those data-driven insights into action.

For many small businesses, reducing their dependence on cash through digital payments acceptance has played a major factor in being able to get paid and maintain revenues.

Mastercard has pledged $250 million and committed to connecting 50 million micro, small and medium-sized businesses globally to the digital economy by 2025 using its technology, network, expertise, and resources in support of the company’s goal of building a more sustainable and inclusive digital economy. As part of these efforts, Mastercard is focused on connecting 25 million women entrepreneurs.

“Small and medium sized businesses are vital to the diversity of economies, and to the progress of economic recovery. The MEA retail sector’s SMEs have shown resilience by prioritizing best practices and really internalizing the power of digital – both in-store and online through contactless and ecommerce. As their digital transformation successes increase adoption in other sectors, the whole ecosystem benefits by sustainably driving commerce forward into a future of growth,” said Amnah Ajmal, Executive Vice President, Market Development, Middle East and Africa, Mastercard.

Rising costs and maintaining staff among concerns

When asked about the main thing that keeps them up at night, 56% of regional SMEs in retail mentioned the challenge to maintain and grow their business was their top issue. Looking at concerns over the next 12 months, over half (54%) identified the rising cost of doing business, while 41% cited access to capital.

From an operational perspective, concerns for the next year include maintaining current staff levels (42%), training staff (37%), and finding the right talent for new needs (36%) – highlighting the growing trend around the development of people as a key theme for small business success.

Benefits of a cash-free economy

Growing confidence levels in digital as a business imperative are tied to a deeper understanding and wider recognition among SMEs of the advantages that result from a growing digital economy. When asked about the biggest benefits of a cash-free economy to their businesses, SMEs in retail stated faster access to revenues (50%) and ease of not processing cash (47%), but specifically also mentioned less potential for fraud (45%). Safe cyber-secure solutions are essential for buying and selling, and more businesses in retail than in any other sector highlighted the digital economy’s ability to effectively address fraud.

The area where most retail businesses in the region say they now need support is access to a wider range of financial services (55%). SMEs in this sector also want support managing or upskilling teams (49%) and effective regulatory support from government (48%).

As consumer trends evolve in a post-pandemic world, businesses must adapt and prepare for the future. Mastercard’s Economic Outlook 2021  estimated that 20-30% of the COVID-19 related surge in e-commerce would be a permanent trend in the share of overall retail spending globally. Late last year, a Mastercard study showed that 73% of consumers in the Middle East & Africa are shopping more online than they did since the start of the pandemic.

Furthermore, new payments methods are gaining ground and 9 in 10 shoppers would consider making a purchase with an emerging payment technology over the next year, including cryptocurrency, biometrics, contactless, QR codes, digital wallets, and wearables. Consumer passion for the environment is also growing, with 7 in 10 believing it’s more important for businesses to do more for the environment, and 25% in the Middle East saying they would stop buying from brands that do not behave sustainably.

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