How can Fiji’s important but struggling micro, small and medium enterprises best recover from the economic impact of COVID-19?

This question has been the subject of intense debate among experts, policymakers and everyday citizens for more than a year now.

An online panel discussion in August, organised by the U.S. Embassy Pacific Youth Council, delved deeper into the subject to better understand the challenges and opportunities for Fijian MSMEs in a post-coronavirus economy.

The panel included Bram Peters, UN Capital Development Fund’s (UNCDF) Pacific Lead; Jon Apted, partner at Fijian law firm, Munro Leys; and Sashi Kiran founder and director of NGO, FRIEND Fiji.

The panelists discussed a way out of the protracted crisis for MSMEs, examining the following questions:

• Why should businesses innovate during the COVID crisis?
• How can digitalization support MSMEs in a post-coronavirus economy?
• What role can good leadership play?

They agreed that despite the economic hardships, some emerging stories of businesses innovating using digital technologies and social media was a positive sign.

While the emphasis for now is on survival, Fiji’s MSME sector, under the right conditions, has the potential to reach new heights when the crisis eventually subsides.

“People become very resourceful and innovative when hardship strikes. More and more we’ve seen that digital is playing a very important role in business but also the way people meet and socialize,” UNCDF’s Mr Peters said.

As the director of FRIEND Fiji, Ms Kiran works closely with poverty-stricken communities and has first-hand experience with how people are innovating to cope with COVID-19’s impact.

“Fiji has a lot of potential with the traditional skills we have which could be turned into innovative products for the market – for example sea salt, dried sea wood, dried mango,” she said.

MSMEs form an important component of Fiji’s economy, contributing over 18% to GDP and employing 60% of the country’s labour force.

As many rely on tourism, the country’s main economic driver, the sector has been among the hardest hit by COVID-related border closures and social restrictions in place since March 2020.

Many restaurants, cafes, roadside stalls and market vendors have lost most of their income or are operating at half capacity.

With Fiji’s economy set to contract by 4.1% in 2021, following a 20% decline last year, some businesses may never open again. According to a Fiji Government business survey, 74% of MSMEs have either closed temporarily, permanently or are operating on reduced hours.

For those hoping to ride out the storm, limiting the damage until things improve will be key for future business prospects and continuity, the panelists said.
Ms Kiran believes good and forward-thinking leadership, as well as innovation, play a major role.

Using the example of Food Well Fiji, she said it was important for leaders to balance managing the crisis with trying to maintain supply and serve customers safely.

Food Well Fiji is a popular food delivery service that started buying fresh produce from local farmers to sell online when COVID forced people indoors last year. Since creating a Facebook page in July last year, the company has amassed more than 20,000 followers.

“The leadership has to think beyond today and have a long-term vision,” Ms Kiran added.

Suva lawyer, Mr Apted, said: “In the current situation, as markets close, as supply gets hard, as your skills are no longer needed, it's also about innovation.” Mr Apted cited examples from the arts and entertainment sector, where people have used social media to earn money during the ban on public gatherings.

“A lot of them are now using Twitter Spaces or Facebook Live to entertain the Fijian diaspora. Using traditional ideas like soli (contribute) they are doing shows online and people donate money from all over the world to the artists,” the constitutional and employment lawyer said.

Digital literacy and innovation
These stories clearly highlight the potential for digital technologies to transform MSME business models and unlock new revenue streams.

But what about digital literacy and bridging the digital divide between urban and rural communities?

For businesses and people to enjoy the full benefits of digital technologies, they need to be able to access and use services like M-Paisa with ease and convenience.

According to Mr Peters, bringing digital services to underserved communities – also known as ‘last-mile’ communities - remains a challenge in Fiji and the Pacific.

“For example, if you run a business in the Lau Group, it’s totally different compared to a business on Viti Levu,” he said.

Mr Apted similarly views digital literacy as an urban phenomenon in Fiji, not fully accessible or understood by people living in rural communities.

“For example, many still do not know how transactions happen [online], how the money moves – and that’s the challenge,” he said.

Bridging the Digital Divide
Efforts are already underway to bridge this gap, improve digital literacy and boost innovation around the region.

UNCDF has developed two new programmes - the Pacific Digital Economy Programme (PDEP) and Digital Finance for resilience in African, Caribbean and Pacific countries (DF4Res) - to support inclusive access to digital platforms for rural communities, women, MSMEs, and seasonal workers in the Pacific.

The Fijian Government has also announced a subsidy scheme to support MSMEs to list goods and services on Vitikart, a popular e-commerce trading website established by Vodafone, with support from UNCDF, in 2020.

FRIEND Fiji is also in the process of setting up an innovation fund for unemployed people to start small businesses. The successful applicants will receive business counselling, registration support and mentorship for three months.

The panelists agreed that such a multi-stakeholder approach was needed and would eventually bring positive results.

“When it comes to literacy, it’s not only the government but the private sector that also has a role,” Mr Peters said.

“Platforms like M-Paisa have provided a very good avenue to address many challenges. But quite a number of people are not tech-savvy to transact on those platforms so they need support.”

Overcoming crisis
The economic impact of COVID-19 has brought the MSME sector in Fiji to its knees. But there are also opportunities to ride out the crisis and grow beyond it.

There is a strong push for businesses to start trading goods and services online, and for MSMEs in particular to ramp up digital activity.

The Fijian Government has also announced a FJ$200 million COVID-19 Recovery Credit Guarantee Scheme to provide concessional financing to businesses affected by the pandemic.

Besides operational changes and access to finance, the panelists believe good business values could also be the difference between survival and closure.
“I would just say in this very difficult times, keep your heart open, be compassionate, and support each other,” Ms Kiran said.

“And please keep the trust. Trust is a very big asset, much more than any capital right now. So if somebody trusts you with market supply or investing in your business, please keep that trust.”