The Impacts of COVID 19 on Small and Medium Enterprises

Abstract

This study was aimed to assess the impacts of COVID 19 on the Small and Medium Enterprises (SMEs). The SMEs contributes country’s economy, it is an income opportunity for the society, and it creates employment opportunities for the youth, women and the entire society. COVID 19 has grown into an unprecedented health, economic, social, business and the entire cycle of the life. Current outbreak has severe economic consequences across the globe. To limited spread of this pandemic the global government should admire steps to curb the spread of the COVID19, through this the government imposed nightly curfews, a ban on public events, social distance, stay at home, the closure of non-essential business. This study is limited to SMEs located in Garowe to assess how the pandemic was affected the SME’s supply and demand, revenue, the employees and other business operations. The study deployed quantitative method of research with questionnaire and telephone interview for collecting data from selected respondents.

The study found that the supply decreased 38% whereas the demand declined 83% as the respondents of the study confirmed. The income experienced 89% of fall down and pressured that 60% SMEs reduced the working hours. On the other hand 75% of the respondents confirmed that they are planning or already lay off the employees.  Most of the SMEs met decline of cash, the cash receipts from sales declined 72%, also the accounts receivable reduced 61% this resulted that 64% SMEs failed to cover the operating expenses. The SMEs faced financial distress or insolvency which resulted to trigger massive job losses and the shuttering of businesses. The COVID 19 has potentially dire implications for SMEs, it needs financial assistance to protect the lives and livelihoods of people, especially the most vulnerable.

Finally the study recommends for the SMEs stakeholders including the chamber of commerce, government, international partners, banks and other interested parties is a needed to  take an urgent stimulus package to support immediate liquidity challenges and negative impacts raised from the containment of COVID 19 and to sustain their existence and developments.

Key words: COVID 19, Small and Medium Enterprises (SMEs), supply and demand, revenue, temporarily or permanently closure

DOI: 10.7176/EJBM/12-25-11

Publication date:September 30^th 2020