Caribbean Trade Law and Development

Category: covid19

  • COVID-19 and MSMEs: Two and a half years on

    COVID-19 and MSMEs: Two and a half years on

    Alicia Nicholls

    Shortly after the World Health Organisation (WHO) declared the novel coronavirus disease (COVID-19) a pandemic in March 2020, I had authored a blog piece about the outbreak’s possible impact on micro, small and medium-sized enterprises (MSMEs). I had also posited some options for MSMEs to help weather the COVID-19 storm. On June 23, I had the honour and pleasure of presenting on the topic “COVID-19 and Business: Reflection, Impact and Options” at the 39th Annual Conference of the Institute of Chartered Accountants of the Caribbean (ICAC). It is in this vein, and in recognition of the upcoming United Nations’ MSME Day on June 27th, that this ‘update’ article reflects on the impact of the COVID-19 pandemic on MSMEs two years on. Specifically, it discusses how businesses have pivoted and proposes some further options for weathering these increasingly turbulent economic headwinds.

    Setting the context

    The first confirmed COVID-19 case in a Caribbean Community (CARICOM) Member State was in Jamaica on March 10, 2020. Since then Caribbean countries, like other countries around the world, have undergone at least four or five waves of infection fueled by the initial virus and subsequently by variants.  As of June 21, 2022, there have been over 750,000 confirmed COVID-19 cases and over 13,400 confirmed deaths in CARICOM Member States according to data collected from the WHO’s COVID-19 Dashboard.

    Since the start of the pandemic, Governments have had to maintain a delicate balance. This involved implementing measures to flatten the COVID-19 curve to reduce infection and hospitalization rates, but also with the knowledge that these measures would dampen economic activity, especially tourism, the bread and butter of most of our regional economies.  At various stages and to varying degrees, governments both regionally and internationally, implemented curfews and stay-at-home orders, lockdowns, mask mandates, travel restrictions and temporary border closures. The most stringent measures were taken particularly in the first wave of the virus when we were still learning about the virus and how to cope with it and prior to the availability of an effective vaccine.

    Governments formulated protocols around social distancing requirements, temporarily banning certain ‘close contact’ activities or placing limits on the numbers of patrons for these activities. In 2020 and 2021 many Caribbean Governments also made the difficult decision to cancel their annual festivals or carnivals, which are major money earners and tourist draws, due to the risk of having such a large number of patrons. Save for some exceptions, most Caribbean countries avoided vaccine mandates and took a more persuasive approach to vaccine uptake.

    These government public health measures, while necessary for managing the epidemiological impact, negatively affected firms. In a very informative Interamerican Development Bank (IDB) study, Acevedo et al (2021) found a positive correlation between social distancing policies and the proportion of firms surveyed reporting a drop in sales. Though noting that this pattern was viewed across countries worldwide, the correlation, they argued, seemed to be stronger for countries in the Caribbean. Similarly, the International Trade Centre (ITC) in an earlier study found that 76% of surveyed firms providing accommodation and food services stated that full or partial lockdowns had strongly affected their business operations (ITC 2020).

    Business Impact  

    Two years into the pandemic, we now have a pretty useful set of data from the World Bank’s Enterprise Survey and its COVID-19 business pulse survey on how firms have been impacted globally. Based on data from 120,000 firms in over 60 countries, the World Bank found that on average, companies’ sales dropped 27% in October 2020-January 2021 from pre-pandemic levels, after plunging 45% in April to September.

    Regionally, using data from the IDB’s “Innovation, Firm Performance and Gender (IFPG)” Survey, Acevedo et al (2021) described as “substantial” the impact of the pandemic on Caribbean firms surveyed. They observed that “more than 90% of Caribbean firms surveyed reported a negative impact and a 33% on average reduction in sales” and that firms in the category of “services and retail” reported the largest decrease in sales and capacity utilization. Similar studies on the business impact of the COVID-19 pandemic have also been conducted in Suriname (Khadan 2020) and Jamaica (Tennant 2021).

    COVID-19 has had a very differentiated impact on businesses, that is, not all businesses were impacted negatively or in the same way. Globally, those businesses in so-called ‘high or close contact’ sectors– such as the tourism, hospitality, entertainment and retail sectors – were among the most impacted, especially due to the tourism shortfall and social distancing requirements (ITC 2020; Bartik et al 2020). Women and youth-led/owned firms appeared to be more significantly affected (ITC 2020). This is not because of their quality of leadership but because of the structural barriers many women and youth-led/owned firms usually face, including greater difficulty in accessing finance.

    An interesting Financial Times article on winners and losers from the pandemic showed that at January 2022 several large companies like Apple, Alphabet and Microsoft had seen significant increases in their market valuations since the start of the crisis. However, other large firms also saw non-negligible reductions. That being said, MSMEs were more significantly impacted than larger firms. In its COVID Business Impact Survey, the ITC found 55% of SMEs indicated that that the pandemic had “strongly affected” their business operations and that one out of four (26%) micro firms risked shutting down permanently within three months, whereas less than one in ten (9%) large firms were in a similar position.

    Many MSMEs at the start of the pandemic lacked functional websites or e-commerce capability or even delivery which meant they were often at a disadvantage to pivot to online shopping and service delivery. Indeed, the COVID-19 pandemic exacerbated some of the issues facing businesses, especially small businesses, such as cashflow difficulties and access to finance. Other impacts included reduced sales or loss of access to local/international markets, while also incurring increased costs, such as the need to purchase personal protective equipment (PPE) and pay for more frequent sanitization of work spaces.

    Many MSMEs were affected and continue to be impacted by supply chain disruptions. Many faced price increases from suppliers and tighter supplier payment terms, as well as longer waiting times for supplies as suppliers prioritized orders from larger purchasers.  Some businesses also faced increased costs of inputs, especially due to global supply chain disruptions and higher commodity prices.  Some businesses faced productivity losses due to staff layoffs, reduced hours and in some cases there were unfortunately business closures.

    How have businesses pivoted?

    Businesses have had to do lots of soul-searching, hunkering down and in many cases, belt-tightening. The fundamentals of sound leadership, teamwork, evidence-based business planning were key, and those which were in the fortunate position to quickly adapt through the use of technology were among those who weathered the best so far.

    Businesses implemented firm-specific COVID-19 protocols informed by national guidelines. They also looked for new clients/markets for their products. JAMPRO (the Jamaican export and investment promotion agency) was able to find new markets for Jamaican mango exporters. In some cases, businesses had to source from newer suppliers either due to supply chain disruptions or because of more favourable payment terms offered by other suppliers.

    Some new businesses sprung up to cater to new areas of demand, such as pickup and delivery. Many retailers and restaurant businesses added online shopping or booking and delivery service, which were particularly useful during the lockdowns and have been continued. Regional rum manufacturers started manufacturing and also donating rubbing alcohol and hand sanitizers when there was a shortage of these products. One of my favourite restaurants no longer gives patrons physical menus. Patrons instead use the QR scanner on their phone to scan the QR code the restaurant provides to access the menu online using the restaurant’s wifi.

    Other business responses included implementing work from home policies and adopting technology to facilitate this remote working. This led to some firms engaging in downsizing their physical space.

    While CARICOM governments lack the fiscal largesse to offer the extensive stimulus packages which larger countries were able to finance, they however provided various forms of support to businesses. These included in some cases special grants,  deferral of taxes and social security contributions, tax debt forgiveness, concessional loans and grants, temporary loan moratoria, ‘compensation’ for lockdowns, and training opportunities. However, businesses in the informal sector did not qualify for many of these support measures as eligibility often required that the applicant should be a registered business or incorporated and be able to show financial statements for a defined period. A key lesson coming out of this is that governments must make it easier for businesses to formalize. Behind every business are people with families to feed and support and where a business fails, that is at least one person who has lost an income and the ability to support herself/himself and family.

    Adapting to the new normal

    The term “new normal” has become ubiquitous in our parlance in recognition that while the worst of the pandemic appears to have passed us, COVID-19 will remain with us for quite some time. With an increase in the vaccinated population and lower infection numbers, most governments have now rolled back or even eliminated completely their Covid restrictions to kickstart economic recovery. However, the COVID-19 impact on the economy has been compounded by the Russia/Ukraine war and the sanctions imposed by the international community in response to Russia’s actions. This has further disrupted global supply chains, and led to spiralling inflation globally, higher commodity prices and product shortages and growing workers’ demands for higher wages to offset the soaring cost of living. The war has prompted the International Monetary Fund (IMF) to slash its global growth forecasts for 2022 and 2023 in its April World Economic Outlook. How can businesses continue to adapt in these increasingly turbulent times?

    First, innovation, as cliché as it sounds, is pivotal for businesses to build competitiveness. This involves prioritising research and development and market research and leveraging technology to improve day-to-day operations and customer experience. Companies worldwide are also relooking working modalities. In the UK, for example, over seventy businesses spanning a variety of industries are participating in a pilot study on a four-day working week with no cut in workers’ pay for the reduced hours.

    Second, many business support programmes appear to be under-used for a variety of reasons, including businesses’ lack of awareness of their existence or perception of their usefulness in some cases. Where possible, businesses should be on the look out for available business support and assistance offered by export promotion agencies and other business support organisations.

    Third, businesses should continue to explore new product offerings to meet new and growing areas of demand. For example, given the growing food security issues intensified by the Russia-Ukraine conflict, there are opportunities, such as, of expanding the availability of wheat flour substitutes, such as breadfruit and sweet potato flour.

    Fourth, businesses should continue to expand their markets. CARICOM businesses have preferential access to several markets thanks to the trade agreements the Community has concluded with Colombia, Costa Rica, the Dominican Republic, the European Union, the United Kingdom and Venezuela. They also have access to the United States and Canadian markets for most goods under unilateral trade preference regimes offered by those governments. Businesses which are not yet exporting and are looking to do so should take advantage of the export support programmes, such as training, workshops and other technical assistance and capacity-building programmes offered by regional export development agency Caribbean Export and national export promotion agencies and business support organisations. Additionally, sourcing locally and regionally where possible, through making use of our trade arrangements with Latin American countries, will help with building supply chain resilience.

    Fifth, cyber-security is one area on which businesses often skimp to their detriment. With more of their operations being conducted through digital means, businesses are now more exposed to hacking, malware and data breaches which, when they occur, result in a very embarrassing and dangerous situation for a business and reduces client confidence and trust.

    Sixth, if there is one thing that COVID-19 has made clear is that MSMEs need to manage risks, ensuring they have updated business continuity plans and appropriate insurance coverage.   

    Seventh, COVID-19 will be with us for some time. We know that business must go on and we must live with COVID-19, but protecting the health of employees and customers must be paramount and never sacrificed for profit.  

    Lastly, while survey fatigue is indeed a real problem, it is imperative that businesses are more open to sharing information with governments as evidence-based policy making can only be successful if there is up-to-date data. Governments cannot offer suitable business support without timely and accurate data on which to base their measures. There is also the need for continued and greater business-academia linkages such as greater internships, mentorship programmes, data-sharing and partnerships to ensure graduates are workforce ready and to assist businesses with research.

    In closing, as I had predicted in my previous article, COVID-19 has been a significant challenge for businesses, both regionally and globally. Not all businesses have been impacted the same way but MSMES have generally been more negatively impacted than larger firms. Businesses have been finding ways to adapt. Those which had the greatest capacity to incorporate technology into their daily operations and to serve customers appeared to be the ones which were better able to manage. Although we appear to be nearing (hopefully) the tail end of the pandemic, we are not yet out of the woods. Moreover, several storm clouds still loom ahead. MSMEs must continue to pivot in order to not only survive but thrive in this ‘new normal’.

    Alicia Nicholls, B.Sc., M.Sc., LL.B is an international trade specialist and founder of the Caribbean Trade Law & Development Blog. These remarks were part of an address at the 39th Annual Institute of Chartered Accountants of the Caribbean (ICAC) Virtual Conference. The author takes this opportunity to thank all frontline healthcare workers for their yeoman’s service and expresses condolences to all persons who have lost a loved one to this virus.

  • An uphill climb?  International Trade for Boosting Post-COVID-19 Growth in Least Developed Countries

    Lucius S.J. Doxerie – Guest contributor

    Lucius S.J. Doxerie

    The Covid-19 pandemic severely impacted/devasted the economies of countries that have been classified as ‘least developed’ by the international arena. It has prompted me to take a closer look at the ideation of resilience amid global shocks and market failures.

    The aim of this brief article is to examine the role of trade in boosting economic growth of least developed countries (LDCs) such as Haiti, Liberia and Timor-Leste. Special attention will be diverted to the type of preferential treatment received and the trade policies needed to increase the growth prospects in a post-Covid period. We first need to highlight the current situation with regard to trade amongst LDC countries as underscored by the World Trade Organisation (WTO) and will posit possible solutions to facilitate an amelioration of trade.

    According to (WTO 2022:5) “The top ten LDC exporters represented more than 80 per cent of LDC merchandise exports in 2011; this declined to 73 per cent in 2020. LDC exports continue to be concentrated in five major destination markets: China, the European Union, the United States, India and Thailand.”.

    As early as the 1930’s, discussion around the benefits of lessening restrictions to international trade and investment was actively happening among countries. In 1948, an international agreement was established among countries to reduce barriers to trade. After eight rounds of meetings, a General Agreement on Tariffs and Trade (GATT) was formed, and in 1995, the World Trade Ogranisation (WTO) was established. The WTO is an international trade governing body that is tasked with monitoring, enforcing and liberalizing trade amongst countries (Suranovic 2010).

    The key reasons why countries trade is summed up below.

    1. Differences in technology (Ricardian theory of comparative advantage)
    2. Differences in resource endowments (Pure exchange model of trade and Heckscher-Ohlin factor proportions model)
    3. Differences in demand (Monopolistic model)
    4. Existence of economies of scale in production (Increasing returns to scale)
    5. Existence of government policies among countries

    In the reality, trade takes place for many reasons. There is no single model or theory that captures all the reasons. For example, the Ricardian model, which focuses on the differences in technology among countries posits that everyone benefits from trade whereas on the other hand the Heckscher-Ohlin model suggests differences in endowments are the reason for trade and that there will be losers and winners. These traditional trade theories illustrate a myopic justification for trading as countries trade for a myriad of reasons. According to experts like Suranovic, most of these theories of trade are very simplistic in nature and generate unrealistic assumptions.  

    So let’s now discuss, especially in consideration of the quote below:

     “Least developed countries (LDCs) have been recognized by the United Nations since 1971 as the category of the states, which are deemed highly disadvantaged in their development process, for structural, historical and also geographical reasons”(Białowąs and Budzyńska 2022:1).

    As early as 1979, least developed countries have been receiving preferential treatment from advanced economies as part of the Tokyo round of the GATT. These preferences fall under what is coined the generalised system of preferences (GSP). As such, they have enjoyed exclusive schemes geared at entry into the markets of advanced economies by removing barriers such as tariffs and quotas from the early 2000s (Klasen et al. 2016).

    According to the WTO, “the Istanbul Programme of Action for LDCs (IPoA) for the decade 2011 to 2020 identified trade as one of the eight priority areas of actions for the economic growth and sustainable development of least-developed countries”(WTO 2022:3).

    Trade as a percentage of the Gross domestic Product (GDP) for LDC’s since the year 2000 is reflected below in figure 0.1.

    Source: http://data.worldbank.org

    The graph above illustrates that trade as a percentage of GDP for LDCs rose steadily from as early as 2003 up until the financial crisis in 2008. A downward pattern continued for another eight years until 2016, then there was improvement. However due to the Cocid-19 pandemic a downward movement has been evidenced since.

    The graph below illustrates the latest statistics of the LDCs share of world exports.

    Source (WTO 2022)

    We can clearly see that there was steady expansion of exports between 2017-2019. After the pandemic, there was a sharp decline of .04%, falling way below the expected target set by IPoA. (WTO 2022) shows that LDCs have seen declines over the last ten years in merchandise exports in all areas except clothing.  Although LDCs received preferential treatment, not all goods and services exported are covered (Antimiani and Cernat 2021).

    So what does this all mean, and what’s the bottom line?

    There is clear evidence supporting the WTO’s preferential treatment towards increasing  the revenues and economic prosperity of LDCs (Antimiani and Cernat 2021). Notably, there is still room for further easing of  trade barriers especially due to the shocks created by the pandemic. This is further underpinned by larger regional trade blocks emerging amongst developed countries undermining the efforts of the WTO (Palit 2015).  A 2016 paper carried out by (Klasen et al. 2016:5) using econometric techniques highlighted that “only Canada’s, Australia’s and EU’s trade preference systems have a positive and significant impact on LDCs’ exports”. Therefore, the following recommendations are proffered in the interest of economic uptake and growth through trade for LDCs.

    1. Establish regional trade agreements among LDCs to help increase their market share.
    2. Provide concessions for value added goods from LDCs within the global value chain for finished products exported by WTO members
    3. Increase the unilateral agreements enjoyed by LDCs  especially duty and quota free access to world markets on a wider range of products
    4. Increase the production and institutional capacity of LDCs by providing technical support to their industries
    5. Improve the LDC service waiver allowing it to cover more areas within the service industries

    These recommendations will allow LDCs to improve their trade practices, have more standardized procedures, facilate growth of local sectors which, in turn will increase the overall welfare of the economy and the people post covid.

    Note: Multiple WTO reports, textbooks and journals from industry experts were utilized in the writing of this article.

    Lucius S.J. Doxerie is an aspiring economist and co-founder and CEO of Stratagem Paradigms Inc.  He is a Chevening Scholar currently enrolled at the University of Bradford completing a Master of Science in Economics and Finance for Development. 

    REFERENCES

    Antimiani, A. and Cernat, L. (2021) Untapping the full development potential of trade along global supply chains: ‘gvcs for ldcs’ proposal. Journal of world trade 55 (5), 697-714.

    Białowąs, T. and Budzyńska, A. (2022) The Importance of Global Value Chains in Developing Countries’ Agricultural Trade Development. Sustainability 14 (3), 1389.

    Klasen, S., Martínez-Zarzoso, I., Nowak-Lehmann, F. and Bruckner, N. (2016) Trade preferences for least developed countries. Are they effective? Preliminary Econometric Evidence. Policy Review 4.

    Palit, A. (2015) Mega-RTAs and LDCs: Trade is not for the poor. Geoforum 58, 23-26.

    Suranovic, S. (2010) International trade: Theory and policy. The Saylor Foundation.

    WTO (2022) Boosting Trade Opportunities for Least Developed Countries. WTO. https://www.wto.org/english/res_e/publications_e/boottradeopp22_e.htm Accessed 22/03/22.

  • Closer Africa-Caribbean Relations: A COVID ‘legacy good’?

    Closer Africa-Caribbean Relations: A COVID ‘legacy good’?

    Alicia Nicholls

    Without doubt, if one considers the significant loss of life, human suffering and economic hardship inflicted by the novel coronavirus disease (COVID-19) since December 2019, the negatives far outweigh the positives. But as the saying goes, when ‘life gives you lemons, make lemonade’. For those unfamiliar with this phrase, it is an entreaty to make some good out of a less than ideal situation, no matter how bad it is. In this article, I argue that deeper south-south cooperation, and in particular closer Africa-Caribbean cooperation, appears to be one potential COVID-19 ‘legacy good’.

    First, let me state from the outset that bilateral and regional initiatives towards deepening Africa-Caribbean ties predate COVID-19. For instance, the African Union (AU) has for some time now recognized the African diaspora (including that in the Caribbean) as its sixth region. In 2019, the leaders of two African countries, Ghana and Kenya, respectively, made separate high-level visits to the region. Jamaica has its Africa-Caribbean Institute of Jamaica. An AU-CARICOM forum was planned for July 2020 but had to be unfortunately postponed due to the COVID-19 pandemic. CARICOM also announced the creation of a joint embassy to be housed in Nairobi, Kenya. Moreover, African and Caribbean countries participate and cooperate in various multilateral and other fora, such as the World Trade Organization (WTO), the United Nations (UN), Organisation of Africa, Caribbean and Pacific States (OACPS), the Commonwealth of Nations, as examples.

    However, it could be argued that the exigencies of the COVID-19 crisis have intensified the need for deeper Africa-Caribbean collaboration on areas of mutual interest in multilateral fora and at the regional and bilateral levels. As many western countries turned inward to focus on bringing the crisis under control in their countries, Caribbean countries were forced to turn to newer non-traditional partners for assistance in accessing vaccines. For instance, to use another South-South example, India’s generous donation of vaccines to Barbados and Dominica were critical to the start of Barbados’ vaccine programme which to date has vaccinated over 70,000 Barbadians, or nearly a third of the population. As such, it is heartbreaking to watch what is happening in India at the moment as it undergoes a deadly second-wave. I continue to keep our Indian brothers and sisters in my prayers.

    Turning back to Africa, CARICOM was also granted access to the Africa Medical Supplies Platform, a procurement system for medical supplies. Jamaica became the first CARICOM Member State to receive vaccine supplies under that mechanism. In a COVID-19 environment, improved vaccine access for developing countries has been a unifying theme for Africa and Caribbean countries’ multilateral cooperation, including at the sub-regional level. Both regions have condemned vaccine nationalism, particularly the hoarding of vaccines and imposition of export controls on needed medical supplies by some developed countries.

    Another laudable recent development in Africa-Caribbean cooperation is the formation of the Africa-CARICOM Group (AfCAR), a geopolitical grouping of sixty-eight African and Caribbean countries in the UN in March this year. Their first act was to issue a joint statement in the UN General Assembly in commemoration of  the ‘International Day of Remembrance of Victims of Slavery and Transatlantic Slave Trade’.

    There are many other areas in which Africa-Caribbean cooperation already exist, such as climate change, debt relief, financing for development and repatriations for the Trans-Atlantic Slave Trade, for example. There has been some  high-level cooperation involving Caribbean, African and Pacific countries on raising awareness on the de-risking issue, manifested most acutely by the withdrawal or restriction by large Western banks of correspondent banking services to banks in developing countries. African and Caribbean countries are among the most affected by this practice which has implications for trade, investment attraction and financial inclusion. The upcoming UNCTAD XV Quadriennial Conference due to be hosted virtually and chaired by Barbados in October this year presents another opportunity for our regions to collaborate on placing these and other issues on the global trade and development agenda.

    Additionally, as tourism-dependent Caribbean economies hard-hit by the COVID-19 pandemic seek to step up diversification efforts, African countries are among those targeted for greater economic engagement. Barbados has announced the creation of embassies in Ghana and Kenya (part of the CARICOM joint effort), while Jamaica will establish diplomatic relations with Liberia and Togo. Both Barbados and Jamaica have indicated the deployment of enhanced economic diplomacy as part of their Post-COVID-19 recovery strategies. There are also promising areas for further regional and bilateral collaboration, such as agri-business and sustainable agriculture, renewable energy, the cultural industries, education and digital payments systems.

    Naturally, for this momentum of closer Africa-Caribbean ties to be sustained, it must transcend the political level and trickle down to greater business-to-business and people-to-people engagement. Banking relationships would also need to improve to faciliate greater trade between the two regions. Current political discussions on improving air and sea connectivity would help to bolster the still meagre tourism, trade and investment ties between the two regions. Africa-Caribbean goods trade volumes remain small, with CARICOM countries enjoying a trade surplus with the continent on a whole.

    At the bilateral level, December 2020 saw an inaugural direct flight between Montego Bay (Jamaica) and Lagos (Nigeria), in hopes of commencing a regularly scheduled and most overdue direct link between the African continent and the English-speaking Caribbean. The potential for strong Africa-Caribbean tourism exists as an increasing number of Afro-Caribbean persons are interested in tracing their genealogy, discovering their African roots and learning about the ‘Motherland’. Encouragingly, the region’s top tertiary institution, The University of the West Indies (UWI) has signed a memorandum of understanding (MOU) with the University of Ghana. This raises the possibility of enhanced student and faculty exchanges, other educational collaboration and meaningful academic research between our two regions.

    As I conclude, I concur with the sage words of Dr. Len Ishmael who noted in her 2019 study ‘Under-invested: The Caribbean-African Relationship‘:

    “The future of Caribbean-African relations is one ripe with potential and promise, but it requires
    the investments of time, attention and political will to transform the relationship into one fit for
    purpose and suitable for these modern times.”

    It would also be remiss of me if in concluding I fail to lament the dearth of scholarship on Africa-Caribbean relations. As such, Afronomics Law will be hosting a scholarly Blog Symposium examining the “Prospects for deepening Africa-Caribbean Economic Relations”. The deadline for submission of blog contributions is May 14. Learn more about the symposium and how to submit a blog piece here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. All views herein expressed are her personal views and should not be attributed to any institution with which she may from time to time be affiliated. You can read more of her commentaries and follow her on Twitter @LicyLaw.

  • COVID-19’s Impact on Micro, Small and Medium-Sized Enterprises (MSMEs)

    COVID-19’s Impact on Micro, Small and Medium-Sized Enterprises (MSMEs)

    Deah James, B.Sc., M.Sc.

    Deah James, Guest Contributor

    The World Health Organization (WHO) classified the COVID-19 outbreak as a global pandemic in March 2020. To date, there have been over 8 million persons infected and over 400, 000 deaths worldwide as a result of the virus. Despite it being a health crisis, COVID-19 has not only taken a toll on the persons it has infected but on businesses and economies on a whole.

    In St. Vincent and the Grenadines, the effects of the virus have been no different. Most of our businesses can be categorized as micro, small and medium enterprises. And it is these businesses that are said to have been hit the hardest by the fallout from the pandemic.

    Even though they can be agile in response to the changing world, MSMEs are also susceptible to shocks such as COVID-19. This is because these businesses are vulnerable by nature. Access to finance is a primary obstacle.   

    According to the World Trade Organization (WTO), many of these enterprises depend on international trade. This is because they either export their products through direct or indirect channels or because they import the inputs needed to manufacturer their products to sell on the local markets.

    These types of businesses also account for a large portion of the employment in a country and are a major employer of women and youth.

    With the disruptions in the supply chain caused by unprecedented lockdown measures enacted to contain the spread of COVID-19, MSMEs are finding it increasingly difficult to find new suppliers, deal with price increases that have occurred and also the massive drop in demand for products in most sectors.

    To help business owners, governments have created stimulus packages with the focus on assisting with the effects of COVID 19. One such initiative by the Government of St. Vincent and the Grenadines is the expansion of the existing Promoting Youth Micro-enterprises (PRYME) programme. In addition support for business include loan forbearance, utility bill moratorium, VAT and Tax waivers and extension on filing income tax returns and for payment of motor vehicle licenses and liquor licenses.

    To show the value placed on Micro, Small and Medium Enterprises, the United Nations in April of 2017 adopted resolution 71/279 which designated June 27 as Micro, Small and Medium- sized Enterprises Day. This was done to raise public awareness of their contribution to sustainable development and global economy.

    For this year’s celebrations, the International Trade Centre (ITC) will host a WebTV programme on Wednesday June 24th entitled COVID-19: The great lockdown and its impact on Small business.

    Deah James, B.Sc., M.Sc., is an international trade and development professional with keen interest and experience in the areas of trade facilitation, sustainable development, regional integration, aid for trade and financing for development.    

    Photo credit: Pixabay