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Supporting SMEs affected by COVID-19
20 April, 2020

The COVID-19 pandemic is badly hurting the SMEs sector in Africa, which constitutes the majority of the business and an important driver of growth. Market demand is down; businesses have curtailed, if not temporarily closed; many jobs are being lost; spillover effects into financial markets are being felt in which SMEs are facing continued challenges in managing their cash flows and financial commitments. Among the sectors that are affected include hospitalities, tourism, manufacturing, trade, transportations, restaurants, rentals and related sectors. The SDGC/A recommends the following drawing lessons on measures taken by policy makers and the financial service providers (banks, microfinance institutions, insurers and related) in Africa and around the globe in supporting SMEs to be able to cope with the negative impact of COVID-19.

  1. Conduct (in collaboration with competent authorities such as the Ministry of Trade and Industry, Chambers of Commerce, SMEs development agencies and associations, financial service providers, universities and others) a quick survey to understand the negative impact of COVID-19; identify sectors that are very much impacted by the epidemic; and develop recommendations to address the crisis in a more standardized, collaborative and expeditious way involving key stakeholders.
  2. Introduce more coordinated effort involving private and public sector actors including finance service providers to support SMEs facing difficulties during the crisis.
  3. Set-up emergency funds with clear framework to support SMEs significantly impacted by the epidemic and reduce SMEs bankruptcy.
  4. Conduct capacity building (supported by NGOs and universities) for SMEs on innovative and more resilient project ideas and business strategies which help to mitigate the impact of COVID-19.
  5. Consider facilitating, among others, temporarily waiving taxes and fees, rental and utility payments and provision of wage subsidies on a case by case basis and following prudent practices.
  6. Support SMEs to adopt new working methods and diversified business platforms including online-based and virtual service provisions which can help SMEs to continue operation and sustain their business during the lockdown and curfew.
  7. Depending on the specific context, and as the case may warrant, financial service providers should consider provision of emergency working capital facilities, provision of temporary relief through payment holidays and debt rescheduling and implementation of other flexible lending policies with strict adherence to sound practices.

 

 

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