COVID-19 and the survival of micro, small businesses

One of the more challenging assignments that will face the country once we begin in earnest to assess and seek to limit the extent of the damage that the coronavirus has inflicted on the business sector will have to do with creating some sort of blueprint for putting those various micro- and small businesses that have folded or faltered badly under the weight of the pandemic, back together again.

State support aimed at helping micro- and small businesses build resilience is strictly limited. It is not our view that the Business Support Organizations (BSO’s) are sufficiently well-equipped to address this issue in a really comprehensive way. Our position of the attitude of the lending sector has been clear and repetitive.

This newspaper has established a certain intimacy with sections of the micro- and small business community. Our take on the post-COVID-19 recovery prospects for many in this grouping is not good. Quite a few of the owners (probably about twenty five across the various sectors that we have spoken with) are less than optimistic about recovery. It is true that by nature, some small and micro-businesses are possessed of a certain structural nimbleness and with an operating robustness that allows them to adapt to challenges that bigger, more cumbersome enterprises would find difficult to cope with. A far greater number of them, however, dwell closer to ‘the edge’ than we may think.

Take high street vendors. More often than not, their ability to trade tomorrow depends on how well they do today. The ‘turnover’ principle can be a brutally pressurising basis on which to run a business. In almost every instance, it’s a matter of one ‘strike’ and you’re ‘out.’ That is why vendors go after even the most modest sales with a certain aggression. What may appear to be a small transaction to the casual observer, may determine the difference between them being able to return to the streets tomorrow, or otherwise.

Once you undertake a social probe of the small and micro-enterprises, you realise why it is important that everything possible be done to try to ensure their survival. In a great many instances the structures of families that depend for their sustenance on micro-and small businesses carry with them weighty responsibilities that include large numbers of dependents, not least, young children and old people. You miss a day or two of trading and you are pretty much ‘out on a limb’.

One might argue, admittedly, with some measure of validity, that even some businesses that are blessed with more solid foundations could find themselves facing the same predicament. In the instance of structurally weak micro- and small enterprises, the potential for immediate-term and irreparable collapse is far greater.

The recent Geneva-based International Trade Centre (ITC) Business Impact Survey which accumulated evidence on how the pandemic affected 4,467 companies in 132 countries is instructive. Analysis of the data shows that the pandemic has had a significant impact on more than 50% of the respondents. Two thirds of micro- and small businesses reported that they had been significantly affected by the crisis, compared with 40% of large companies.

We have no corresponding figures for Guyana but our own probe tells us that while many of the larger businesses will get meaningful help where it is needed to dig themselves out of the hole created by COVID-19, micro- and small businesses, will, for the most part, not get that help. In fact, according to the ITC, long before COVID-19 had taken anywhere close to its full impact on the global business community, one-fifth of SMEs said they risked shutting down permanently within three months.

Nor should we neglect to make the pointed observation that Guyanese women, who almost invariably ‘double up’ as home-makers and small business owners have had to bear the brunt of the crisis here in Guyana since they operate in many, perhaps most, of the industries that have been immediately and directly affected by the COVID-19 crisis. These include accommodation, food, agro-processed goods, and clothing. According to the ITC, “Even when the distribution of gender across sectors is taken into account, the differences persist, with 64% of womenled firms declaring their business operations as strongly affected, compared with 52% of men-led companies.” That is not a point that should be missed here in Guyana, where, as has already been mentioned, women serve simultaneously as bread-winners and home makers. The ITC also reports that youth-led enterprises have also signalled a high risk of closing. Here the portents for youth unemployment and the possible knock-on consequences are clear.

More often than not, too, our reckoning does not take account of those scores, perhaps hundreds, of micro- and small enterprises not ‘registered’ anywhere on the national ‘blip’ but which, nonetheless, make their own considerable contributions to the wider social good by making a difference to the employment figures and by extension to the welfare of families. It is these, particularly because they are completely detached from the formal system and, by extension, from such support as that system might offer, that are in the greatest danger of ‘going under’ quietly. These are likely to be the softest targets for a COVID-19-driven collapse.