Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-Owned Enterprises
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Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises A case of Mogadishu June 2020 Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises ACKNOWLEDGEMENTS This publication was possible though the generous funding from RAAGSAN. This report is the result of joint effort. We are grateful to Christine Awuor and Badra Yusuf for leading the study. Special thanks to Mohamed Abdirizak and Adow Mohamed for their valuable contribution. We are also grateful to Amal Shire, Munira Mohamed and all the field researchers for their contribution. RAAGSAN would like to express its gratitude towards the peer review members who contributed as well throughout the process. Thanks to all the key informants and MSMEs that gave their time and helped realize this study. We hope this report is helpful in the discussions and decisions on the next steps for supporting women led MSMEs in Somalia. Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises © RAAGSAN 2020. All reasonable precautions have been taken by the researchers to verify the information contained in this publication. However, the published material is being distributed without warrantyof any kind, either express or implied. The responsibility for the interpretation and use of the information lies with the reader. In no event shall RAAGSAN be liable for damages arising from its use. This publication does not necessarily represent the decisions or the stated policy of RAAGSAN. RAAGSAN is a female led social enterprise providing strategic and analytical consulting services across Somalia. We collect real time data to inform policies and programs. Our aim is to connect communities and policy makers. We work through a network of young professionals based across the country supported by senior consultants with strong post-conflict environment experience. For further information on the report, please contact: [email protected] Cover Photo: @cyprints Design by: Designcube Solutions 3 Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises GLOSSARY Cash Flow The total amount of money and money-equivalents being transferred into and out of a business, especially as affecting liquidity COVID-19 An infectious disease caused by a newly discovered coronavirus. Economic Migrant A person who travels from one area to another to improve their standard of living Expenses Money spent, or costs incurred, by a business in their effort to generate revenues MSME Micro Small and Medium Enterprise (MSME) are formal or informal businesses with 2-9 employees (Micro), 10-49 employees (Small) and 50 or more employees (Medium) Revenue Income generated from normal business transactions, including discounts and deductions for returned merchandise Revolving fund An amount of money that exists in order to finance something, but from which any loans must be replaced in order that the full amount is available again SME Small and Medium Enterprise Social Media Websites and computer programs that allow people to communicate and share information on the internet using a computer or mobile phone Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises LIST OF ACRONYMS COVID-19 Coronavirus disease 2019 FGS Federal Government of Somalia FMS Federal Member States WHO World Health Organization FOREX Foreign exchange, or forex, is the conversion of one country’s currency into another. In a free economy, a country’s currency is valued according to the laws of supply and demand. Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises TABLE OF CONTENTS Executive Summary ..................................................................................... 9 1. Introduction ..................................................................................................... 13 1.1 Background of study ......................................................................... 13 1.2 Objective and scope of the study ................................................. 14 2. Methodology .................................................................................................... 15 2.1 Methods adopted ............................................................................... 15 2.2 Limitations of the study ................................................................... 16 3 Survey Respondent Demographics ...................................................... 17 3.1 Respondent Region ........................................................................... 17 3.2 Age and Marital Status ..................................................................... 18 3.3 Business-related Demographics .................................................. 20 3.3.1 Type of business ownership ............................................................ 20 3.3.2 Length of operations ......................................................................... 20 3.3.3 Registration with local administration ....................................... 20 3.3.4 Access to phone and internet ........................................................ 20 4 MSMEs Awareness of COVID-19 .............................................................. 23 4.1 Level of awareness and information sources ........................... 23 4.2 MSMEs attitudes and practices related to prevention ......... 24 5. Implications of COV-19 crisis on MSMEs ............................................. 27 5.1 Socio-Economic and Cultural Environment under COV-19 27 5.1.1 Global, FGS and FMS restrictions on COV-19 and implications for MSMEs .............................................................................................. 29 5.1.2 Implications of COV-19 on culture and women’s way of doing business .................................................................................................. 29 5.2 Implications on MSMEs Business Continuity ........................... 29 5.2.1 Business operations-continuity ..................................................... 29 5.2.3 Staff .......................................................................................................... 33 5.2.4 Cost of business ................................................................................... 33 5.3 MSMEs response gaps and priority needs ................................ 35 5.3.1 Business response gaps ................................................................... 35 5.3.2 MSMEs priority needs, current support and gaps .................. 37 6. Policy analysis in response to COV-19 and recommendations . 39 Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises 7. Conclusions and Recommendations .................................................... 42 7.1 Observations and Conclusions ....................................................... 42 7.1.1 Socio-Cultural Environment and Economic Implications ... 42 7.1.2 Financial Implications and MSMEs Business Continuity ..... 42 7.1.3 Leveraging immediate support to MSMEs ............................... 45 7.1.4 Identification of MSME’s to support ............................................. 45 7.1.5 Innovation, technology and policy measures ........................... 45 7.2 Recommendations ............................................................................. 46 7.2.1 Short term recommendations ....................................................... 46 7.2.2 Medium and long term recommendations .............................. 48 8. Annexes 8.1 Concept note on the study 8.2 Survey Tool 8.3 Key informant interview tool 8.4 List of people interviewed Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises 8 @cyprints Socio-Economic Implications of COVID-19 on Micro, Small and Medium Women-owned Enterprises EXECUTIVE SUMMARY Somalia’s capacity to deal with and react to COVID-19 is Findings of the Research undermined by factors such as widespread poverty and inequality, a persistent humanitarian crisis, protracted 1. The characteristics of women MSMEs conflict, fragile health care system, and a weak economy. in Mogadishu reflect historic COVID-19 has had a devastating impact on the economy systemic cultural and socio- leading to a crisis compared to the global recession. economic barriers. These businesses The Federal Government of Somalia (FGS), in its March are unlikely to survive without 25 publication, expected -11% drop on Gross Domestic support and policy interventions. Product (GDP), as the pandemic hit the countries livestock export market and witnessed nearly 50% decrease on Women-owned MSMEs in Mogadishu consists of mostly remittance from Somalis living abroad. sole proprietors aged between 24-65 years. Only 35% of surveyed businesses were registered with local RAAGSAN Consulting conducted this research to administrations. The characteristics of women MSMEs understand the socio-economic impact of COVID-19 on are fundamental in the development of policies and women-led micro, small to medium-sized enterprises in design of interventions to support businesses. Important Somalia. considerations are: The specific objectives of the research were: • Women MSMEs are less likely to pivot into tech-based innovations that potentially save businesses during • To assess the challenges faced by female-led MSMEs the pandemic1. Only 32% of respondents had