It is widely accepted that SMEs are the “backbone” of the Romanian economy. Small businesses account for 52.7% of total value added and 65.8% of employment in Romania making them integral to innovation and job creation.

By Mihnea Rădulescu, Enterprise Business Unit Director, Vodafone Romania

What is more open to debate is how governments can best support SMEs through this unprecedented period of economic challenge – and the role digital tools and solutions can play in driving greater business stability and resilience. At Vodafone, we provide a comprehensive range of digital services to small businesses in Romania, and so we are well placed to help identify the solutions that will enable them to achieve the digital transformation that will deliver long-term growth.

Six months after the first wave of EU lockdowns, now is an opportune time to assess how businesses have been impacted – and governments have reacted – by the Covid-19 crisis to date. Vodafone Group commissioned a new study involving 1,200 SMEs from several European countries, conducted from the start of the pandemic up until July 2020 with the aim to better understand the main challenges faced by SMEs and how digital has supported SME resilience during the pandemic crisis. The learnings highlighted by this study, combined with additional analysis by Deloitte, provide tangible recommendations for future government policy.

Digital supports resilience and recovery

Vodafone Group’s survey of 1,200 SMEs has shown that those SMEs that have digitalised are more likely to have found new business opportunities during the pandemic. In fact, the most digitalised businesses secured opportunities at more than double the rate of the least digitalised.

And it is highly likely that these digital shifts will drive long term changes. Just as more of us expect to work more flexibly in the future, 44% of businesses expect the measures they have implemented in recent months to be permanent as indicated in another Vodafone Group’s research, Future Ready Report.

However, too many SMEs have found significant barriers when it comes to the adoption of digital services. They are still much less likely than larger businesses to take advantage of new technologies, even though they connect to the internet at the same rate. Despite the benefits of digitalization, the Digital Economy and Society Index (DESI) 2020 data found SMEs lag behind larger businesses in adoption of nearly all technologies. The largest gaps are in digitalization of the internal organizational process, where the greatest efficiency gains are to be made.

There are a number of reasons why SMEs have struggled to digitise:

73% said they had had trouble with the set-up and implementation of new technologies, integration with existing technologies and business processes, migration from previous systems and decommissioning old technologies; ,
51% said that they had struggled to identify the right technology to use, or the right supplier
38% of SMEs said that they needed support with training.

However, while there is much technology firms can do to make their products and services more accessible and thereby increase adoption, not every small business still understands the importance of greater digitalisation. Therefore, there is still a significant role that governments can play to help accelerate adoption in order to unlock further economic and societal benefits.

A tailored SME digitalisation framework

The research clearly shows that the government in Romania should adopt a clear SME digitalisation policy framework that:

addresses availability gaps and take- up of high-speed connectivity. In order to better facilitate digitalisation of SMEs, it should aim to increase overall and rural access and potentially pair this with short-term voucher schemes to support high-speed connectivity take-up and reduce barriers to further digitalisation;
offers flexible vouchers, grants, or tax credits for digital investment, so that SMEs have the capacity find solutions based on their individual needs; and
delivers additional support measures to support capability such as an accessible, one-stop shop, particularly providing targeted guidance and training for key sectors.

These recommendations will not only help Romania improve its overall DESI score, currently ranking 26^th across EU Member States, but will also ensure that SMEs are able to digitalise fully.

As we seek to emerge from the crisis, we have an opportunity to shape the economic recovery in a way that delivers sustainable, long-lasting, impactful change. The EU reconstruction plan presents a once in a lifetime opportunity to contribute to this transformation. Investing in small businesses, and helping them achieve their full, digital potential, will ensure a stronger, future-proofed Romania.

The full report can be downloaded from here.

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