“Batsumi ga ba nke ba tlhakanela sekgwa.” This Setswana proverb roughly translates, ““Hunters
will never be satisfied in the same forest”. More often than not, this is usually attributable to human nature, basically how we react against one another in times of scarcity.
But how do businesses of all kinds react against one another in times of scarcity? Typically, any economy would have different levels of active businesses, from small to medium to large players, and how they react to each other is mostly governed to maintain fair competition from the point of consumption or market share. But what about times of scarcity when consumption is scarce? Can regulation on competition keep an even playing field for all active businesses or does it become the case where the hunter with a bigger bag will out-hunt the hunter with a smaller bag even if armed with sharper hunting skillsets than the bigger hunter?
The reality of the forest
The reality is that consumption is now becoming borrowed. We are slowly reaching a point where we literally must borrow to consume basic commodities. Last time I checked, our aggregate debt stood at just above P50 billion. Inflation has now become increasingly persistent rather than transitory.
According to the Consumer Price Index, inflation has not only increased but has spread to other commodities like energy, witness what happened this week with fuel prices increasing and electricity tariffs going up. This will further reduce consumption and shrink the same forest the business community has been hunting in.
The question is, which hunter has suffered the most and is most likely going to suffer more because of this shrinkage in consumption? I think, like everybody else, the small to medium enterprises will suffer the most, but my sentiment is a little bit more rustic than usual.
The reality of the lesser hunter
The naivety in our analysis of these inflationary pressures on SMMEs has been limited to increased cost of production and disrupted supply chains. The reality is that SMMEs are not only losing out on the bottom line as compared to larger businesses but are more likely to lose out on skilled labour to larger hunters in the economy as a result of inflationary pressure, which will affect their competitiveness in the market.
To emphasise my point further, let us look at this from an anecdotal angle. Like other businesses, SMMEs are currently experiencing increased costs of production and are forced to transfer the costs to the consumer. Unlike larger businesses that have the ability to avoid passing increased costs to the consumer and can even reduce prices in the face of inflation, which is referred to as shrinkflation, SMMEs are forced out of the competitive equation and become more marginalised.
But the biggest kick to the gut is when SMMEs cannot afford to increase employee salaries and their skilled labour is now driven to larger businesses. How does that now affect SMMEs’ competitiveness? Their products will be priced higher than larger businesses and their ability to deliver will be compromised due to their loss of skilled labour.
In retrospect, without pointing any fingers at any institution, the dip in inflation that reflected the lockdown periods should have been a period to amass and soundproof against the noise of the world, should inflation make a global noise as it is currently doing.
Therefore, the naivety in thinking that empowering SMMEs to remain competitive through initiatives such as import bans and government guaranteed export loans kind of throws down the gauntlet on the cybernetic characteristic of the economy that says “nature will always find its way in every transaction”. How do we expect SMMEs to compete internationally through exports if they can’t compete locally?
The rustic introspection
What if we respect the laws of the forest and accept that the more equipped hunter will always get the biggest kill and the only way to empower the lesser hunter is to structure the hunting game in way that will ‘persuade’ the larger hunter to buy and use hunting gear made by the lesser hunter?
What if we assign all back-end sections of the value chain to SMMEs and ‘persuade’ all the larger businesses to outsource the back-end processes to SMMEs while allowing SMMEs to gradually integrate into other parts of the value chain? Could that create an evenly balanced eco-system in a limited market while building local SMMEs into competitive entities in a gradual manner?