How small businesses in Turkey and the Middle East are coping with the impacts of COVID-19

Aya Amad, 28, Jordanian Enterpreneur and IEO Bedaya winner

Spark

Small and medium-sized enterprises (SMEs) make up a vital part of the economies in Turkey and the Middle East and North Africa region, yet they may be the most vulnerable to the economic effects of COVID-19.

To understand what policies could be most helpful, the Dutch NGO Spark commissioned RAND Europe to conduct a survey — targeted primarily at businesses owned by migrants, women, and young people — on the impact of COVID-19 on their work.

What is the issue?

Government-enforced lockdown measures across the world in response to COVID-19 have forced many businesses to stop operations and caused severe disruption to supply chains, domestic demand and international trade.

Small and medium-sized enterprises (SMEs) make up a vital part of the economies in Turkey and the Middle East and North Africa (MENA) region, yet they may be the most vulnerable to the economic effects of COVID-19.

How did we help?

RAND Europe was commissioned by SPARK, a Dutch NGO, to conduct a survey on the impact of COVID-19 on SMEs in the Middle East and Turkey, targeted particularly at businesses owned by migrants, women and young people. The results of the survey will help to inform policymaking and decision making on how best to support small business owners in the region during the pandemic.

What did we find?

Of the 171 respondents, 63 per cent were from owners of micro businesses (less than 5 employees) and 35 per cent were from small businesses (5 to 50 employees). Business owners that were 34 and younger made up 63 per cent of respondents, migrants 57 per cent and women 32 per cent.

What have been the economic effects of COVID-19?

  • 79 per cent of surveyed SMEs in the MENA region and Turkey indicated an overall negative impact on their company.
  • 61 per cent believed their companies would not survive more than four months and 85 per cent believed they would not survive more than a year.
  • Almost half of young entrepreneurs (18 to 34 years old) do not expect their businesses to survive longer than two months.

What measures have SMEs had to take to protect their business?

  • 56 per cent of surveyed enterprises have reduced their own salary or scaled back on services. 47 per cent have had to take at least one of the following actions: laid off staff temporarily, requested a payment suspension or reduced or stopped wages for staff.
  • Smaller companies are less likely to have laid off staff, with 21 per cent of companies with less than five employees laying off staff compared to 40 per cent of companies with more than five employees.
  • Female entrepreneurs are less likely to have laid off staff, with 21 per cent of female-owned companies having done so compared to 34 per cent of male-owned companies.

What are the challenges faced by SMEs because of COVID-19?

  • 85 per cent of surveyed enterprises are hindered by securing financing, improving business processes, government regulations suspending business, staff unable to fulfil job requirements, covering staff salaries and a drop in domestic demand.

What positive effect, if any, has there been for SMEs?

  • One in six respondents indicated that COVID-19 has had a positive impact on their business, and 26 per cent see opportunities to expand their business.
  • Young SME owners seem to be slightly more resilient than older owners, with 20 per cent of respondents under 34 reporting an overall positive impact compared to 11 per cent of older respondents.
  • Entrepreneurs without staff seem to experience more positive impacts than those with staff.

What support do SME owners need to keep their businesses going?

  • All except two surveyed firms indicated they would need some form of support to protect their business. 80 per cent felt they would need financial grants.
  • Digital skills training and web-based marketing are felt to be of particular importance. Female entrepreneurs indicated they were more interested in online training compared to males.