The COVID-19 pandemic figures indicate differences across countries; there is no doubt about the health crisis’s profound economic implications. As an outcome, micro, small, and medium-sized enterprises (MSMEs) are affected worldwide. The Effect of COVID-19 on Small Business can be seen in geographic areas that are not (yet) significantly affected by the virus itself.
The Impact of COVID-19 on Business
The pandemic seriously influenced the vast majority of the companies. While small businesses feel the result across all regions, African businesses appear to be hitting the most. Measures to control the virus, such as lockdowns and quarantines, have hurt company processes. It has also affected many global supply chains at the local and international levels. Business managers claim that their profits have declined dramatically, and it has become increasingly challenging to access inputs. In other words, the effect COVID-19 on small business has faced both market and supply-side difficulties.
Small businesses face increased risk of permanent closure
Although the crisis has impacted most firms, the depth and extent vary by firm size. The impact on MSMEs is particularly severe because the pandemic hits them. Food services and accommodation and wholesale and retail services are the sectors affected by the pandemic. Small companies are more vulnerable: as they have fewer assets and fewer cash reserves to offset the liquidity shortages induced by lockdowns. Nearly one out of four MSMEs are at risk of shutting down permanently in a few months.
Access to information is the key to helping those most in need
Transparency and access to information are essential for businesses to benefit from government assistance programs. Exposure to information and benefits from services of government assistance relating to COVID-19 is severe. Even with small companies providing the most support, they are also the least likely to benefit from such stimulus packages. The COVID-related assistance program is put in place, with clear protocols to ensure timely access to such service.
Overall, small businesses make up more than 95 percent of all enterprises, accounting for about 65 percent of overall jobs. A widespread breakdown of MSMEs may have dire effects on national economies and prospects for global development. Governments should give priority to policies that benefit small businesses in their response to the COVID-19 pandemic.