GCCI-commissioned study tells bleak effects of Covid on MSMEs


With Alagie Manneh

A survey commissioned by the Gambia Chamber of Commerce and Industry (GCCI) and supported by the Center for International Private Enterprise (CIPE), has highlighted in detail the adverse effects Covid-19 pandemic is expected to have on MSMEs in the country.

The study, covered businesses of all sizes and from a wide range of sectors including tourism, agriculture, fashion, ICT, manufacturing, etc., found an increasing number of Gambian businesses uncertain about the future, and trepidation that the economic impact will lead to revenue and job losses.


In The Gambia, MSMEs are primary job creators, contributing 20 per cent to GDP and accounting for 60 per cent of employment. Seventy per cent of private sector operators are MSMEs.

This called for an urgent need for the GCCI to monitor the extent of the damage the Covid-19 crisis has caused on MSMEs and other sectors, including its ongoing and future implications.


Adverse effects in detail

The Covid-19 pandemic continues to pose a serious threat to many businesses across The Gambia. For certain sectors, regions and business categories facing disproportionate risks, the crisis is likely to leave an indelible impact on many MSMEs and corporate entities alike, the GCCI-backed study has found.

“Many were vulnerable even before the crisis and are now the least resilient because they typically have limited cash reserves and smaller client bases. Economic growth in 2020 is now projected at 0.5 percent (July 2020), one of the lowest levels on record. This is a downward revision of 5.8 percentage points from an earlier projection of 6.3 percent,” the survey discloses.

The situation is also threatening to derail the impact of the National Development Plan (NDP 2018-2021), which seeks to increase the MSME contribution of employment in the economy from 63 to 75 per cent. A high share of both MSME and corporate jobs are now vulnerable, it found.

The survey, which covered at least 100 various businesses, found 74 per cent of respondents either likely or certain to lay off workers.

“A good number (43%) of all respondents are females, with an overwhelming majority of all small businesses led by women owners or managers and directors. Barely two-thirds of all business respondents are aged between below 25 and 45 a youth bulk that represents a tremendous opportunity for contribution to economic development.”

According to the report, half of the survey respondents employ 1-10 people, while more than half boast an annual revenue of up to GMD500,000. “One third of respondents have 5-15 employees. Ten per cent of businesses surveyed employ 16-49 employees, and 8 per cent employ 50 or more. These figures confirm that businesses, both MSMEs and large corporate entities, are strategically significant in employment generation and economic development.”

The survey found an overwhelming majority (81%) of businesses do not have enough cash to keep their commerce operational for the next three months. “This is due to the absence of revenue resulting from measures deployed to mitigate or contain Covid-19, according to 85 per cent of respondents. Short-term liquidity is “king” for all small businesses, but the burden appears to be even more acute for the most vulnerable startups, and micro-businesses,” it noted.


Silver lining in a pandemic

By all measures, the Covid-19 pandemic has hampered the Gambian economy, and left many livelihoods in dire straits. The survey found opportunities in the new reality, however, it is said survival prospects appear precarious for many entrepreneurs.

It added: “Opinion was equally divided between those that are optimistic about new opportunities and those apparently consumed by uncertainty. The most important future business opportunity will be virtual working (49%), followed by new product development (44%), and diversification of product offering (27%) and increased sales due to new business models (27%).

“Nearly half of all businesses surveyed are confident in their abilities to provide their products and services virtually, as one of the ways to cope with client contact in delivering products and services. Start-ups appear to be more enthusiastic about new business opportunities. It is well known that digital and new technologies create an opportunity for MSMEs to increase their reach and efficiency at lower costs.”


Greater government intervention

The government of The Gambia, has done its modest bit to help alleviate the hardships caused by Covid-19 on businesses including the reduction of the monetary policy rate by 2 percentage points to 10 percent. However, the survey found more support was needed, urging the government to help “drive resource mobilisation from both public and private sectors to create a robust stimulus fund for relief and recovery that provides a fully integrated (financial and non-financial) solution to MSMEs in hardest-hit sectors. These incentives are a suitable investment tool to boost economic growth and impact the government’s financial position.

“Make Covid-19 funds available only to those businesses screened to have sound business models with potential to save a good number of jobs, while effecting significant tax payments. Some businesses may need a referral to incubators or accelerators for appropriate business support. Restructure loans; waive or reduce tax payments (payroll, corporate) in critical business sectors, promote B2G models that prioritise local SMEs as preferred suppliers to public sector. Invest in formalising the informal sector.”

Even before the survey on impact of Covid-19 on businesses in the country, the Chamber has been monitoring business sentiments and expectations about the market, investors, financial institutions and policy makers. “We are aware that sectors and businesses need to look beyond the challenge and see the opportunity,” CEO Alieu Secka has said.

He added that the Chamber has been trying to work out what the momentous developments of 2020 from the Covid-19 pandemic will mean for it and its business clients. “Yet, with any disaster, also comes opportunity,” the deep-thinking CEO stated.