Much as it was reported that the Covid-19 pandemic led to a minimum loss of US$164.71 million in real output (Thula et al., 2020),[1], most entrepreneurs anticipated that the new year will start on a good note and help to recover the losses incurred in 2020. However, Covid-19 active cases started picking up towards the end of the year into January 2021. The Government of Malawi, just like other nations has responded with measures and restrictions to flatten the curve of positive curses. Some of which include school closures, a night-time curfew, and no gatherings over 50 people. Considering that SMEs play a critical role in Malawi’s economy, generating USD15.8 billion (as of 2019),[2], it is imperative to observe the effects that the pandemic has had on the SMEs so far in Malawi.
Majority of the workforce in Malawi is employed by the public and development/NGO sector. With closure of offices, there isn’t a lot of activities which also help the workforce to make money hence that has affected the supply of money into the economy which the SME sector also benefits from. Without a complete lockdown, the economic activities have still been affected. Beginning with the labour supply, most SMEs have laid off workers in the endeavour to manage their cashflow. On provision of services and/or products, the worst hit sectors so far are accommodation and food services, transport and storage, wholesale and retail, and manufacturing. The slow business in the hospitality industry for instance has knock on effects on other SMEs that supply products and services. The minibus operators have been asked to reduce their carrying capacity to 60%, while the fuel prices remain the same.
In spite of all the challenges, businesses are trying to manage their survival while others may not make it if the pandemic continues for the next two months. This coupled with a lean season experienced by rural farming households between November and March, the SMEs are sailing against strong tides and waves.
Is there hope? What can be done to survive this pandemic? These are some of the questions being asked by SME owners. After investing a lot of time and money, no one wants to lose their business just like that. Accessing finance would have been the best option to shore up business working capital but might not be easy for most SMEs in the current situation. This is also because even in normal circumstances, accessing finance has never been easy for SMEs. The cache word around the globe been given as an answer to these questions is ‘business pivoting.’
Entrepreneurs know that where there is a huge problem there lies a huge opportunity. This is the time to open up and see, take risks and try out new business models. It could be an entirely new business line, or tweaking the current business model. However, the bottom line is for business owners to be as flexible as they canto see further than their eyes can look. To embrace change and flow with the waters. This takes courage and flexibility. So in answering the question of‘ what’s next?’ the answer is CHANGE. Change is next, and it is here to stay. Mindset change on business operations is required. One of the SME owners narrated that they cannot take up equity in fear of losing control of their business – it’s a mindset. Such decisions need to be made in a particular context. There is no straight YES or NO to such models, as it all depends on what works. Embrace the change in the midst of the second wave.
[1] Thula, M., Matola, J., Nyasulu,T., and Nyasulu, K. (2020) Assessment of the Impact of COVID-19 on Employment in Malawi.
[2] Malawi FinScope2019 - Micro, Small and Medium Enterprise (MSME) Survey
