Small businesses in Africa must innovate to survive Covid-19
In June, the ITC launched a report titled Covid-19: The Great Lockdown and its Impact on Small Business. Dorothy Tembo, the acting executive director of the International Trade Centre, (ITC) a joint agency of the United Nations and the World Trade Organisation discusses the report, the role of women and youth in post pandemic recovery in Africa.
What key messages does your newly released report on Covid-19 and micro, small and medium-sized enterprises (MSMEs) convey?
The first is that MSMEs matter, and they must be at the center of any post-pandemic recovery effort. Second, there is a disruption of the global supplies that these MSMEs are a part of. The third message is that, going forward, we need to think carefully about how we support MSMEs, making sure we push in a direction of more resilient value chains that can withstand disruptions in the future.
The report states that MSMEs, especially in poor countries, are disproportionately affected by the pandemic. Why is this the case?
Poor countries face huge economic challenges. The pandemic compounded an already bad situation. For years, these countries have cried out for assistance to build infrastructure that supports economic development. In these countries, businesses are relatively small and cannot access finance. Some of these countries are landlocked and therefore the cost of doing business is much higher than in the others.
Women constitute a huge percentage of Africans engaged in informal trade. Given that women are disproportionately affected by COVID-19, is it reasonable to suggest that they be given priority in any recovery assistance?
Absolutely, and not only because of Covid-19. Women’s economic participation has been very limited. In most cases, women are not very engaged or allowed to participate in business. Even when they can participate, they’re likely workers and when they own a business, they are small operations that cannot grow because of various reasons.
Women’s businesses are likely to be closed as a result of the pandemic; therefore, any form of financial assistance to companies must consider the plight of women or be viewed through the gender lens. The ITC has designed a women’s empowerment programme called SheTrades under which we aim to connect three million women to markets.
What is the timeframe for connecting three million women to the market?
Our commitment is that by 2021 we will have connected three million women to the market. We have already gone beyond half of that number.
Given the disruptive impact of Covid-19, can you still meet the 2021 target?
I believe we can. For the simple reason that the demand to meet the Sustainable Development Goals (SDGs) is even higher now than before. I remain optimistic. We will keep pushing ourselves, understanding the challenges that we face.
How do you connect the women to the market?
We have identified some core issues that make women uncompetitive in business. One is a lack of access to finance. You still have some countries asking women for their husband’s approval before accessing a loan. And interest rates for loans are too high and unaffordable.
Is such thinking going on?
Yes, it is. We are working with different partners. We are part of the SDG 500, which is an initiative that involves other UN agencies. We are collaborating with the private sector and some foundations. The objective is to mobilize about $500 million to support MSMEs, particularly those led by women, to access resources with minimal requirements.
You were heavily involved in trade matters in your country [Zambia]. What are your views on Africa’s free trade area?
I am a believer in free trade and Africa should embrace this opportunity. But what needs to happen is that the level of political commitment should increase. In operationalizing the agreement, participating countries must come through on their commitments. Africa is positioned to attract investments. It has resources for domestic production. It has human resources. We must now organise ourselves better.
What support is ITC providing MSMEs in Africa in these trying times?
Our mandate includes working with MSMEs in support of economic development in developing countries. We support countries to better understand what has confronted them [Covid-19] these last few months. Through surveys, we have information on issues specific to certain countries. Our report builds on those efforts. We have the action plan, but alongside that, we work directly with businesses so they can navigate these challenging times.
What message do you have for business owners in African MSMEs?
It’s a difficult time for MSMEs, for sure. They must ensure they remain resilient in this difficult period. To survive, they must build on their innovative spirit.