While the statistics on the COVID-19 contagion show differences across countries and regions, the deep economic consequences of the health crisis are without question. As a result, micro, small and medium-sized enterprises (MSMEs) are suffering around the world, including in geographic regions not (yet) heavily affected by the virus itself.
On April 20, the International Trade Centre (ITC) launched a unique survey to measure the impact COVID-19 has on small businesses. Here are the results from the first wave of data based on the responses from over 1,200 businesses in 109 countries and collected between 20 April and 4 May¹.
The crisis is affecting companies across all regions
The pandemic has strongly affected the vast majority (60%) of the businesses interviewed. While small businesses feel the effect across all regions, African businesses seem to be hit the most: three out of four interviewed companies perceive severe consequences.
Measures to contain the virus, such as lockdowns and quarantines, have had devastating repercussions for business operations and disrupted many existing local and international value chains. Surveyed business managers report their sales having significantly decreased and that accessing inputs has become increasingly difficult. In other words, companies face difficulties both on the demand and on the supply side.
COVID-19 affects business operations worldwide
Small business faces higher risk of permanent closure
Although most firms have been affected by the crisis, the depth and nature of its impact differ by firm size. Survey findings show that two-thirds of micro firms are strongly affected by the crisis, compared with 42% for large companies. The effect on micro, small and medium-sized enterprises is especially severe, partly because they are overrepresented in sectors most strongly hit by the crisis, such as accommodation and food services, or wholesale and retail services².
Indeed, small businesses are particularly vulnerable: they tend to have fewer assets and limited cash reserves to cushion the lockdown-induced liquidity shortages. Survey findings confirm the extent of this vulnerability, with around one out of four micro, small and medium-sized enterprises at risk to shut down permanently within the next three months. This highlights the need for governments to act fast.
Smaller firms are at higher risk of permanently shutting down within a matter of months
Access to information is key to reach out to those most in need
For companies to benefit from assistance programmes put in place by governments, transparency and access to information are key. It is therefore troublesome that half of the survey respondents found it difficult or very difficult to access information and benefits from government assistance programmes relating to COVID-19.
Moreover, even with small enterprises needing support the most, they are often the least likely to benefit from these stimulus packages: our results confirm that smaller firms find it harder to obtain information and benefits. Governments, once COVID-related assistance programmes are put in place, need to ensure swift access to such programmes with transparent procedures.
Accessing information on government assistance programmes is a challenge
“In this time of crisis, technology providers of all types and sizes are in the midst of reevaluating plans and pivoting strategies. To assist with these efforts, we’ve quantified the COVID-19 impact on technology spending by industry. The results show that more than 60% of the 2020 losses can be attributed to five industries,” commented Jessica Goepfert, program vice president, Customer Insights and Analysis. “That said, no industry is impervious to impact.”