In Sub-Saharan Africa, small and medium enterprises account for up to 90 percent of all businesses. These businesses face financial and operational difficulties in good economic times, and the COVID-19 crisis has only amplified the challenges they must contend with on a daily basis. The pandemic also has the potential to widen existing gender inequalities in economic opportunities across Africa, especially among small businesses. The constraints and barriers that women entrepreneurs face, including but not limited to access to finance, are being exacerbated by the COVID-19 crisis. Never before has support for small and micro enterprises—and in particular those owned or led by women—been more relevant than during this pandemic.
IFC recently published a study focusing on how the COVID-19 pandemic has affected micro, small, and medium enterprises, especially those led by women, through a survey of 13 African countries. They found that over a quarter of all these businesses were unable to continue operating during the crisis, over half needed to adapt their business models to continue operations, and almost 90 percent faced revenue losses. Small businesses across all the countries surveyed encountered similar economic consequences from the global crisis.
Key points from this study:
- The vast majority of micro, small, and medium enterprises (MSMEs) across Sub-Saharan Africa (SSA) are suffering harsh economic impacts due to the COVID-19 pandemic. Women-owned/led MSMEs (W-MSMEs) have been especially hard hit due to their smaller size and concentration in heavily affected sectors.
- W-MSMEs entered the pandemic with lower rates of financial inclusion than M-MSMEs. The pandemic exacerbated these trends. Among the very small share of W-MSMEs and M-MSMEs that accessed financial support during the crisis, fewer were W-MSMEs.
- Despite challenges posed by the pandemic, both W-MSMEs and M-MSMEs still plan to maintain or expand their businesses. In line with this goal, close to 90 percent of MSMEs expressed the need for support, particularly for growth capital and expansion assistance, during the recovery.
- Today, few FIs offer products or support services designed to fully include women entrepreneurs, and only a minority of financial institutions collect gender-disaggregated data to inform business decisions. Prevailing assumptions about the needs of W-MSMEs—especially that they are less interested in accessing digital products and services—are misguided.
- In order to fully address the financial and non-financial needs of W-MSMEs, a greater focus can be placed on tailored credit and other financial service offerings, training programs, digitization efforts, and improvements in the dissemination of available support.
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