According to research by the International Trade Centre, COVID-19 will drive one out of every four small businesses in developing countries to close permanently. Governments are asked to act fast and communicate critical information. While data on the COVID-19 outbreak shows differences between nations and locations, the disease’s significant economic consequences are evident. As a result, micro, small, and medium-sized businesses (MSMEs) all across the world are suffering, even in locations where the virus has yet to make a big impact.

On April 20, the International Trade Centre (ITC) sponsored a one-of-a-kind research study to analyze the effects of COVID-19 on small businesses. The findings of the first wave of data were based on responses from over 1,200 businesses in 109 countries.

The crisis has an impact on businesses in all regions – The epidemic has had a huge impact on the vast majority of businesses (60%). While small businesses in all sectors are affected, African businesses appear to be the worst hit: three out of four organizations contacted say the consequences are severe. The virus’s containment measures, such as lockdowns and quarantines, have had terrible effects on business operations and have harmed many established local and worldwide value chains. Sales have dropped considerably, according to the business managers questioned, and procuring inputs has become increasingly difficult. To put it another way, firms have difficulties on both the demand and supply sides.

Small firms have a higher chance of closing permanently – Despite the fact that the crisis has affected practically all businesses, the magnitude and kind of damage differ depending on the size of the company. Two-thirds of tiny firms, compared to 42% of large enterprises, are adversely damaged by the crisis, according to the survey’s findings. The impact on micro, small, and medium-sized firms is especially severe, owing to their overrepresentation in the crisis-affected industries. Because they have fewer assets and financial reserves to soften the consequences of the shutdown, small firms are particularly susceptible. According to the findings of the poll, one out of every four micro, small, and medium-sized firms is in danger of closing permanently over the next three months. This highlights how important it is for governments to respond fast.

It’s vital to have access to data in order to reach out to those who are most in need – For firms to benefit from government assistance programs, transparency and access to information are vital. As a result, it’s disturbing that half of the survey respondents found obtaining information and benefits from government assistance programs associated with COVID-19 challenging or extremely difficult. Moreover, despite the fact that small firms needed the most help, they are the least likely to benefit from these stimulus packages: our data imply that smaller enterprises have a harder difficulty receiving information and benefits.

It’s tough to find out about government assistance programs – Small businesses account for more than 95% of all firms worldwide, accounting for about 50 percent of total value added and 65 percent of total employment when both formal and informal sectors are considered. The failure of huge numbers of micro, small, and medium-sized firms might have severe ramifications for national economies and global economic prospects. In response to the COVID-19 outbreak, governments should stress measures that support small businesses. The International Trade Centre is ready to support these projects, one of which is the COVID-19 Business Impact Study, which we anticipate to inform appropriate assistance from national governments and international organizations based on the current and future findings of this study.

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Suha Shafi

I hold a bachelors degree in business administration and I’m currently working to obtain knowledge & experience on the day to day activities in the business field for a bright future.