Small businesses drive economic growth – how governments are using data to help them thrive
Governments around the world are focused on boosting economic growth to improve quality of life and fund better public services. Small businesses are critical to this, often contributing more than 50% of GDP.
A recent Global Government Forum webinar examined how governments can help the small- and medium-sized enterprise (SME) sector to flourish – in particular looking at the role of data in helping policymakers to understand trends, opportunities and challenges and design effective policies that support firms in key economic sectors such as tourism and retail.
Speakers from the Philippines, the UK, the European Commission and knowledge partner Visa shared their insights.
How data supports tourism
Ramil S Basuel, the chief of the tourism development planning division in the Philippines Department of Tourism, set out how the team uses data to help businesses.
In particular, the division analyses data to determine which international markets are providing a lot of tourists to the Philippines – but which are not served by direct flights. The government then works with airlines and airport authorities to launch or expand routes and marketing.
“This signals us to formulate programmes and sales missions that focus on these markets,” said Basuel. “By pinpointing specific markets to target, we avoid wasting resources on missions that are low yielding.”
In the UK, Emma Hickman, deputy director for subnational statistics and analysis at the Office for National Statistics (ONS), highlighted a collaboration with the Department for Culture, Media and Sport to analyse how well tourism has recovered after the COVID-19 pandemic. Originally the data used to monitor this had a two-year lag but a partnership with Visa now provides much more recent data.
Hickman noted that by using Visa data, the ONS is able to analyse in-person spending trends in tourism industries, using a modelled home location, to provide estimates that have helped the Department of Culture, Media and Sport establish an up-to-date basis for understanding economic recovery in key sectors.
Data-informed decisions
The ONS has also created a user-friendly tool for viewing statistics called Explore Local Statistics, which brings together information from across government in one place.
Hickman explained: “Based on where you are actually in the UK, you can look for all of the statistics for the geography that you’re in, rather than looking for economic statistics over here, statistics on housing, statistics on health, from different places. So it brings it all together.”
Robert Walls, vice president, head of products and digital solutions at Visa, built on Hickman’s comments to highlight how Visa’s travel spending data can be used in government decision-making.
Insights into transportation links and comparisons between air travel and train travel, for example, can be used to inform infrastructure investments, he said.
Examples of Visa’s work include a project with Japan’s Ministry of Economy and Trade to drive increased digitalisation of payments. The government used Visa data to determine tourist hotspots, and was able to run a marketing campaign to promote digital payments among local businesses in these areas and then track success on a monthly basis.
In the UK, Visa collaborated with a consulting firm working with regional governments who wanted to understand spending patterns. By combining anonymised and aggregated Visa transaction data with anonymised mobile phone location data, they were able to better understand trends about how people move and where they spend.
This highlighted, for example that the lack of low-cost parking in a particular area was spurring people to travel further away to a big-box retailer with ample parking to make purchases. The data also helped to model the impact of measures such as pedestrianising high streets.
Walls said this is an indication of how utilising payments data, trend analysis and predictive modelling can provide governments with powerful inputs into their policy development and measurement.
Visa has now built a Government Insights Hub to help government agencies identify macroeconomic and microeconomic insights relevant to their economies.
What’s the problem?
Making insights actionable was a key topic of discussion in the session.
Basuel set out how the data his office provides to decision-makers is filtered according to the policy issue they are trying to solve, while Hickman highlighted that many government departments sometimes start out too broad.
When central government departments request data, they normally ask for mobility data or financial transactions data and say they “want to see what’s in there”.
“We end up saying: ‘But what do you want to see?’ And it can be a bit of a circular conversation…”, she said.
In the UK, devolution is resulting in more policies being implemented on a local level and “quite often, there’s much more variable analytical capability in local government compared to central government”, said Hickman.
ONS Local was created to engage with local government stakeholders to determine what their needs are, what problems they are trying to solve and then to “navigate the landscape of data”.
Walls also noted the importance of problem definition, saying that “a problem well-defined is a problem half-solved” and this informs models and data selection, including partnerships with third party data providers.
Tomás Filipe Ramalhete, team leader for data management and analysis in the European Commission’s Directorate-General for internal market, industry, entrepreneurships and SMEs, said it is important to ensure that “we are feeding policy officers and people working in policymaking in such a way that it’s not overloading them”. This, he said, means providing “self-service” reports with options to filter the most relevant information and fields, rather than static reports.
Security
The session also emphasised the importance of data security.
“We have to have a legal gateway for any data sharing, and the data sharing agreement will set out exactly what and how the data can be used,” said Hickman.
Visa also takes the issue very seriously. Walls said there are “very strict rules” to ensure that data is anonymised and aggregated so it can’t be used to identify individuals or specific merchants.
The discussion showed how data analytics and consumer spending insights can help governments to design effective policies that support the small business sector. The panellists pinpointed clear goals, user-friendly insights and security as among the key factors for success.
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