Business survey: Financial access can unlock innovation for South Sudanese firms

14 December 2022
ITC News

South Sudanese firms can expand trade with access to finance for business innovation and institutions to support them in their export journey.

Small companies in South Sudan now employ just half of their pre-COVID staff and make half of their pre-COVID revenues, according to a major International Trade Centre survey in the country. The companies have faced major challenges, from internal conflict to the pandemic. Coupled with climate change challenges and higher food prices, they struggle to operate.

Small enterprises account for about 93% of all registered firms, so supporting them is critical.

Limited access to finance constrains the capacities of firms to innovate, according to the survey. Stronger business support services can help these companies access finance, innovate, become certified and upgrade their operations to tackle challenges triggered by COVID-19 and conflict, a new International Trade Centre (ITC) report says.

Promoting SME Competitiveness in South Sudan: Targeted solutions for a resilient future is based on interviews with 476 businesses. The survey findings can inform policies and programmes that help small companies increase their sales and exports, notably to East African Community neighbours, as well as to the rest of Africa and beyond.

The survey was carried out across the country in June and July 2022, with support from the African Export-Import Bank and the European Commission.


Supporting innovation

While few small South Sudanese firms had contingency plans in place before COVID-19 hit, many learned from the experience: 44% say they are taking steps to prepare themselves for future crises, including climate change. Indeed, 90% worry about how environmental risks will affect their business.

The report finds that post-pandemic revenue levels of businesses that innovated frequently were twice as high as those of firms that innovated less. Specifically, 31% of businesses that innovated often earned more than two-thirds of their pre-pandemic revenue levels, compared with 16% of firms that innovated rarely or occasionally.

Innovation can trigger better processes, new products or improvements to existing products. Business model innovations allows companies to rethink operations and value propositions to customers. Even small innovations in operations can bring business benefits.

Only 29% of surveyed firms invested significant resources in research and development (a marker for innovation) and just 40% innovated frequently. Few firms innovate because they often lack access to finance and have low-skilled workforces. The report shows that while most surveyed firms need finance, 83% of these businesses did not apply for a loan because they did not think it would be approved.

Access to finance is a therefore a first step to build resilience and make South Sudanese businesses more competitive. The report highlights the potential of mobile money services, which could contribute to financial inclusion and facilitate commerce. Policies that provide incentives for businesses to innovate can also boost innovative spirit among firms in South Sudan, build resilience against future crises and enable them to seize trade liberalization opportunities in the East African Community and the African Continental Free Trade Area.