The African nation of Gambia has an undiversified and small economy, which is totally dependent on tourism, trade and remittances and agriculture. For a nation that relies heavily on imports from abroad to sustain its economy, the closure of land and air spaces after the advent of Covid-19 dealt a crippling blow.
As the pandemic has spread around the world, the limited access to fuel and the uncertainty on global food prices has had a detrimental effect on inflation in the Gambia. Accordingly to World Bank reports, Remittances from abroad are also sure to decline (14%) with the worsening situation in the dependent countries, especially the USA and Europe.
The impact of the Covid-19 outbreak on the citizens of Gambia has made safeguarding the lives of the poor and the needy very important. Since nearly half of the country’s population lives below the poverty line, a pandemic of this sort will move this vulnerable population even more towards abject poverty as more and more people will be unable to find jobs.
Many Gambians have limited access to electricity, water and sanitation. In such a grim scenario a Government imposed lockdown would lead to increased problems. As almost everyone relies on daily earnings, a lockdown in the Gambia will not be as effective as in a developed country. The answer could lie in imposing a curfew-like situation, where people can still earn their livelihood, albeit with a bit of caution.
Small and Medium-Sized Enterprises (SMEs)
Small and Medium Size Enterprises or SMEs have always remained the driving force in sustaining the economy of any nation by contributing to the GDP of that country. This is why governments the world over attach a lot of importance to their growth because of the contribution they make to the economy.
As in other countries, SMEs form the backbone of the economy of Gambia as they employ 95% of the workforce in the informal sector. Additionally, almost every worker relies on a day to day earnings to support themselves and their families. The closures due to the pandemic and the contagious effect of the coronavirus have brought an abrupt closure to all business activities, creating the most harm to these individuals.
Going into a lockdown will only worsen the situation as it will instantly erase whatever gains these persons made and induce them into poverty. If the Government can offer a stimulus package, as per their limitations, it will provide a useful remedy to the SMEs in these trying times. Since the majority of the workforce consists of women, it is all the more important to help them as otherwise, it will have a direct implication on their families.
Survival of the SMEs post Covid-19
A large number of SMEs have closed down permanently due to the pandemic and the resulting lockdowns. These businesses account for nearly 66% of private-sector employment in the developing nations of the European Union and the United States and contribute nearly 40% of national income in the emerging countries.
Governments of class se to 130 countries the world over have taken a variety of measures to help these small and medium businesses to weather the pandemic storm. As the SMEs face more restraint in accessing funds than the larger firms, especially during a crisis of this magnitude, they were given financial assistance and grants, delay in loan repayment, tax relief and low-interest rates.
As one of the first countries to be hit by the pandemic in January 2020, the Republic of Korea introduced policy measures like financial and tax support to SMEs. It also introduced UNDP’s response and programs to support SMEs. A United States survey shows that 68% of SMEs expect to increase their revenue in 2021 and recoup all their Covid-19 related losses.
Nearly 80% of small business owners in Australia have great hopes of surviving the crisis, even though their sales may not be anywhere near the pre-covid times. The Business Climate Index of Germany strongly improved by June 2020 as it did in the Netherlands. A recent survey in the United Kingdom shows that over 71% of SMEs indicate they have the opportunity to emerge better after Covid-19.
Collective effort required in Australia
Except for supermarkets and some home retailers, the past 12-18 months have been the most challenging for SMEs in Australia. While many believe that most SMEs have the potential to achieve pre- covid recovery, a more collective effort is required from the government to help them thrive. A whopping 98% of businesses in Australia are classified as small or medium, but they contribute significantly to the country’s economy.
While financial support is vital, the government should provide SMEs with the necessary tools to sustain them in the years ahead. One step could include helping the SMEs to adapt to the challenges of Covid-19 by transitioning to online and digital marketing platforms. A digital presence will engage customers significantly.
A comparison with the United States
Let’s do a comparison between USA and Australia government funding policies.
The United States, unlike Australia, has seen an increase in loans to SMEs, both before and during the pandemic, largely due to aid from big banks. When the pandemic set in, the finance was bolstered by small lenders, which suggested other sources drove the increase of small business loans in the US.
The most significant policy implemented by the US government due to the pandemic was the introduction of the Paycheck Protection Program to bolster SMEs. They should begin by improving on innovative finance solutions for SMEs by a regular business card survey like the one compiled by the US to understand better the challenges faced by the SMEs.
Similar to the approach in the United States and Australia, small countries like The Gambia consider support mechanism for the SME as the performance of the economy is largely related to SME activities.