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
Note: Respondents were asked 'How have your business operations been affected by the coronavirus (COVID-19) pandemic?' and 'Which country is your company based in?' Data on 1201 businesses in 109 countries. Only regions with more than 150 observations are included in the graph.
Source: ITC calculations based on ITC Covid-19 Business Impact Survey. Data collected from 21-04-2020 to 04-05-2020.
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.
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