Diseases know no boundaries and COVID19 has been a conspicuous example for this generation, although adverse. With more than 500k cases and 24k deaths (and counting) around the globe, right now, we don’t know how far the world is going to suffer from this pandemic and the global economic crisis that will come thereafter. What’s clear at this stage is that small businesses will get the worst blow and that we need to find ways to prevent their closedowns.
According to World Bank data, small businesses represent about 90% of businesses and more than 50% of employment worldwide. Their existence is crucial in running the economy and providing jobs to locals who otherwise migrate to foreign places for the same. In Nepal, as per the data from the Ministry of Industry in 2016, small and medium enterprises have been contributing over 22% in the country’s economy and generating more than 1.75 million jobs. So, we can assume that the number has spiked since we have witnessed growth in the number of SMEs around us, especially initiated and run by women and youth.
But this number might go south if the lockdown extends and nothing is done from the governments’, CSR from large corporations’ and donor agencies’ side. From what we know, small businesses such as retailers, take away cafes, small service providers and home-based businesses generally run on the narrowest of margins. Additionally, they do not have enough cash reserves required to pass through the substantial loss of revenue that comes from unprecedented events and prolonged inactivity.
Surav Shrestha, co-founder of Odokan.com and DigitMarketUs, shares with us that his team “has been working from home ever since the lockdown but there’s isn’t much that has been going on in terms of generating revenue. Right now, we’re focusing on coming up with different online campaigns to promote local products and our services but the pandemic has taken a great toll on our business”.
Rasana Shrestha, founder of Nuga:, tells us that the company has been hit really hard in terms of finance. As a startup company that makes natural skin care products with low-profit margins, Nuga: faces a huge problem compensating its employees and clearing out the store’s rent. Nevertheless, the hope is to get through the storm and come out stronger as soon as possible.
Likewise, Sonam Shrestha, cofounder of Nochini, tells us that they have “ decided to pause production and distribution operations for safety reasons (both of the team and everyone we would potentially interact with). We’re currently planning our future steps and looking to pivot to adapt to the new business climate”.
Pratham Chakradhar, cofounder of Upcycle Nepal, had similar things to share regarding his business. He tells us that revenue from the store in Patan had been slowing down around 2 weeks before the lockdown was announced. This was because most of their customers were foreigners and they had stopped traveling. “Right now, we’ve provided paid leaves to our employees but we don’t know how long we will be able to offer that. Operations have completed stopped and we’re only focussed on increasing our online presence at this time”.
Small business can be anything; it can be the didi that sells you chewing gums and recharge cards on her nanglo every day to your office or the local café run by Raju dai you drink tea/coffee during work/college breaks. It can also be an online store you get homemade pickles from or one that makes laptop stickers to give your assets some personality.
So how can we go on about helping them?
As consumers, we can order their products and pay them online so they are at least able to have an active cashflow. If they offer services then we can book them for a future date or when the pandemic has found a solution. Another idea is asking for gift cards that we can utilize later to give around to friends and families. That saves not only the time later to shop gifts for different occasions but also helps the small businesses stay in the market.
As financial institutions and owners of big corporations, you can use your CSR funds to provide grants to selected small businesses. This is not the time to announce low-interest loans because right now small businesses need regular cashflow to run and not another liability. Maybe you can call for online applications and qualify ones that align with your values or any criteria that you deem important. For inspiration, you can check out companies such as Amazon, Facebook, WEDC, Verizon, Shopify and more that have already announced grants. (Write to us if you want help in designing the application process)
Government can help the small businesses pause their expenses so that they’re still in business when the economy restarts. Legal bodies around the globe have taken swift measures to ensure that small businesses survive this economic turmoil and similar actions need to be taken in Nepal too.
While Britain has announced that 80% of payrolls for private companies will be paid by the government, the Denmark government will be covering 75% of the wages to prevent layoffs. Canada knows that their economy will suffer dramatically if measures aren’t taken so their leaders are also making policies to support small businesses.
All of us have a part to play when it comes to the country’s development and small businesses shouldn’t be the only ones that take the burden of it.
We need financial institutions, landlords, governments, big corporations, service providers and mostly you to equitably share the burden. If not, we’ll lose hundreds of small and local businesses that we know are helping build our small economy every day.
Let us know what you think can be done in this situation to help our small businesses by writing to us at email@example.com
To learn more about the small businesses that are making an impact in Nepal, check out Entrepreneurs page on our website where we showcase small social businesses.
Article by Yangzum Lama.