Exploring the Strategies Adopted by Small and Medium Enterprises to Survive the Corona Virus Pandemic in the Sunyani Municipality
ABSTRACT
Small and Medium Enterprises contributes a colossal percentage to Gross Domestic Product (GDP) in ensuring economic growth, employment, income stability and poverty reduction in most developing countries like Ghana. The coronavirus (Covid19) pandemic has created major disruptions in the economy and the lives of businesses worldwide, whether or not they can continue their operations. The Covid-19 pandemic outbreak has made a lot of business shut down, leading to a monumental disruption of trade and commerce in many industrial sectors. Retailers and brands face many short term challenges relating to workforce, health and safety, cash flow, supply chain, consumer demand, sales, and marketing. Therefore, this study sought to identify the strategies SMEs have adopted to survive the corona virus pandemic in the Sunyani Municipality. The specific objective of the study were as follows: To identify the impact of the corona virus pandemic on SMEs, to examine the performances of SMEs in the Sunyani municipality before and during the corona virus pandemic and to assess the strategies SMEs are using to survive subsequent pandemic. This study was done using both primary and secondary data.
In order to explore the strategies SMEs have adopted, a conceptual and theoretical framework of the study was designed. These guided the design of data collection instrument to suit the researchers. The study combined exploratory research and case study methods of data collection and analysis. Questionnaires were designed to collect primary date from the respondents.
The study revealed among other things that: high male and youth domination, low level of education among entrepreneurs, lack of access to government support, age of the businesses, low level of sales, inability to implement online marketing were some of the problems that these SMEs faced. In view of these, major recommendations proposed included proper management system, support from government to SMEs, adopting the use of technology in operation, robust business continuity plan etc.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUD OF STUDY
On March 11, 2020, the World Health Organization (WHO) declared the Coronavirus Diseases 2019 (COVID-19) a global pandemic. As at that time, there have been 14,684,741 COVID-19 cases worldwide, with 610,110 deaths (as of 21st July, 2019).
As the pandemic spread, all governments shredded to contain it while minimizing its social and economic impact, scaling up testing, closing international borders, closing schools and non-essential services, instituting social distancing protocols, a ban on public gatherings and functions, and mandatory partial or full lockdowns were the most common strategies.
Ghana also had its fair share of the global pandemic, which claimed lives, caused economic downturns, and put businesses in jeopardy. As of May 27th, 2020, the case count for covid-19 was 7,303, with 2,412 recovering and 34 deaths. This pandemic has had an impact on every aspect of the country’s economy. Schools, churches, mosques, and all other gatherings have been halted for the time being, while government agencies and businesses have been instructed to practice social distancing and all other protocols associated with the fight against Covid-19 (Darko, 2020).
The shock of the COVID-19 pandemic has had a massive effect on Ghanaian companies, compelling many to reduce costs by reducing working hours, lowering salaries, and even laying off employees. This is according to the findings of the Ghana Statistical Service’s (GSS) recent COVID-19 Business Tracker Survey, which was conducted in partnership with the United Nations Development Program (UNDP) and the World Bank. During the country’s COVID-19 partial lockdown, about 770,000 jobs (25.7 percent of the total workforce) had their salaries cut and about 42,000 employees were laid off, according to the findings.
Government has already put in place diverse supports for businesses including the establishment of a Coronavirus Alleviation Program to protect jobs, livelihoods and support small businesses. And also, is the Government’s GH¢600 Million Stimulus Package to small and medium scale enterprises (SMEs). The findings of the Business Tracker provide specificity on the pathways of effects, variation in the effects for different categories of businesses, their geographical areas, and the extent of effects”, Professor Samuel Kobina Annim, Government Statistician noted.
The survey was conducted around the country between May 26 and June 17, 2020 to see how the novel coronavirus has affected private firms. A total of 4,311 businesses were contacted.
During Ghana’s partial lockdown, 35.7 percent of business establishments and 24.3 percent of household firms reported being closed. Firms in the partial lockdown areas report the highest levels of closures during that period, with 51.5 percent of firms in Greater Accra and 55.4 percent of firms in the Ashanti region being closed. The sectors with the highest levels of closures during the partial lockdown were education (65.4 percent), financial services (47.0 percent), transport and storage (46.4 percent) and manufacturing (39.8 percent). Even after the lifting of the lockdown measures, 16.2 percent of business establishments and 14.6 percent of household firms were still closed at the time of the survey. The sectors with the highest rates of closures were education (63.0 percent), transport (34.0 percent) and accommodation and food services (24.0 percent).
According to the data, approximately 244,000 SMEs began to change their business models during the lockdown by relying more on digital solutions such as mobile money and internet sales. Firms in the agriculture and other sectors used digital solutions at a higher rate (56percent), while those in the lodging and food industry used digital solutions the least (28 percent).
Nearly 131,000 companies reported difficulty obtaining financing and expressed concern about the business climate. Based on the current results, the average decrease in revenue is projected to be 115.2 million Ghana Cedis, with SMEs in the trading and manufacturing sectors (including exporting businesses) being the hardest hit.
More than half of these SMEs had trouble obtaining inputs due to a lack of availability or a rise in prices, posing a problem in covering revenue shortfalls. Firms are facing lower demand for their products, difficulties obtaining financing and sourcing inputs, and an extended period of uncertainty.
The World Bank is collaborating closely with the Ghanaian government to mitigate these negative effects and assist SMEs in surviving the pandemic and building resilience in the face of changing economic conditions,” said Pierre Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone.
To lessen the impacts of COVID-19, the survey results suggest the need for policies to support SMEs in the short and medium term. The most desired policies cited by the private sector include measures to improve liquidity such as subsidized interest rates, cash transfers and deferral of tax payments.
SMEs account for more than 90% of private businesses and account for more than 50% of employment and GDP in most African countries (UNIDO, 1999). Small businesses in Ghana are said to be a distinguishing feature of the production landscape, accounting for approximately 85 percent of Ghana’s manufacturing employment (Steeland Webster, 1999; Aryeetey, 2001). SMEs are also believed to contribute about 70 percent to Ghana’s GDP and account for about 92 percent of businesses in Ghana.
In order to survive the recent economic downturn and recession, the SMEs sector has remained highly innovative and adaptable. According to empirical studies, new firms play a significant role in job creation (Garikai 2011, Baptista et al 2005, Stel and Suddle, 2005). Small and medium-sized businesses are regarded as economic growth engines in both developed and developing economies. These SMEs not only help to reduce unemployment, but they also help to create jobs (Mullineur, 1997, Abor & Quartey 2010). SMEs employ 85 percent of the manufacturing workforce and contribute 70 percent of the national GDP. This lends credence to the notion that SMEs have a significant impact on economic development, employment, and income. (OECD, 1997, Villars, 2004).
They contribute to growth, productivity, and job creation. According to Mensah and Rolland (2004), it accounts for approximately 35% of all labour in the country. Small and medium-sized enterprises (SMEs) play an important role in the national economy. SMEs are noted for greater use of local raw materials, job creation, rural development encouragement, entrepreneurship development, and mobilization of local savings, linkages with larger industries and provision of regional balance by spreading investments more evenly, avenue for self-employment, and opportunity for training managers and semi-skilled workers. The vast majority of developed and developing countries rely on the dynamism, resourcefulness, and risk-taking of small and medium-sized businesses to kick-start and sustain economic growth. Small and medium-sized businesses play a critical role in overall economic development.
1.2 PROBLEM STATEMENT
The coronavirus (Covid19) pandemic has created major disruptions in the economy and the lives of businesses worldwide, whether or not they can continue their operations. The overall direct initial hit to the level of GDP is typically between 20-50% in many major advanced economies (OECD, 2020). Many companies have had to lay off staff, while others had to reduce their working hours (Edgecliffe-Johnson, 2020).
The spread of the virus encouraged social distancing which led to the shutdown of financial markets, corporate offices, business and events. The rate at which the virus was spreading and the heightened uncertainty about how bad the situation could get led to a flight to safety in consumption and investment among consumers and investors (Ozili and Arun, 2020).
The Covid-19 pandemic outbreak has made a lot of business shut down, leading to a monumental disruption of trade and commerce in many industrial sectors. Retailers and brands face many short term challenges relating to workforce, health and safety, cash flow, supply chain, consumer demand, sales, and marketing. A lot of markets, especially in hospitality and tourism, no longer exist, whereas online shopping, online communication, and online entertainment, have witnessed unprecedented growth (Donthum, and Gustafsson, 2020).
For the survival of businesses, sustainable income is compulsory (Alkhuzaie & Asad, 2018) which has become a major challenge because of the cancellation of sports, religious, and cultural activities. Mainly, 81% of job providers and 66% of employees have negatively been influenced, as 436 million Small and Medium Enterprises (SMEs) are in jeopardy (International Labor Organization, 2020). The economy is dependent on the consumers and consumers are dependent on those SMEs, likewise, the performance of SMEs is dependent on the consumers (Asad & Abid, 2018; Amir & Asad, 2018; Asad, Iftikhar, & Jafary, 2019). Thus, considering the importance of SMEs in the overall economy, it is very important to do every possible thing to keep the sector alive.
For survival in the current situations, it is compulsory to identify the innovative ways of doing business, and managing change and innovation is a big challenge (Abdin, 2020). Without implementing change, it is impossible to survive because all the businesses are adopting innovative ways nowadays and that’s the only way out (Hadi & Supardi, 2020).
Many countries across the world are facing unprecedented challenges as a result of the Covid19 Pandemic (UNDP, 2020). Ghana and her people are no exception. Like Albert Einstein famously proclaimed: “Amid every crisis lies great opportunity” for managers, the Covid-19 crisis creates an opportunity to foster transilience and thus better cope with the next Pandemic (Craighead, Ketchen, and Darby, 2020).
The study therefore aims to explore the strategies adopted by SMEs to survive the shocks of the coronavirus pandemic in the Sunyani municipality, Ghana.
1.3 OBJECTIVES OF STUDY
The main objective of the study will be to explore the strategies adopted by SMEs to survive the shocks of the coronavirus pandemic in the Sunyani Municipality.
To accomplish the main objective, these specific objectives must be achieved:
- To identify the impact of the corona virus pandemic on SMEs in the Sunyani municipality.
- To examine the performances of SMEs in the Sunyani municipality before and during the corona virus pandemic.
- To assess the strategies SMEs are using to survive current pandemic.
1.4 RESEARCH OUESTIONS
- What were the impacts of the coronavirus pandemic on SMEs in the Sunyani Municipality?
- What were the performances of SMEs before and during the corona virus pandemic?
- What strategies are SMEs using to survive the pandemics?
1.5 SIGNIFICANCE OF STUDY
The data of this research would help SMEs prepare adequately for future pandemic and create better standards for growth. This will also help SMEs consider establishing pandemic – specific policies and procedures. These policies and procedures will help SMEs know what steps to take to survive and achieve greater output in case of any other pandemic. Again, the findings of this research will help SMEs include pandemic planning considerations into existing resilience management activities. This will provide a comprehensive response and also provide continuity in case of other pandemics? To a competitive advantage over that of their competitors. Also, findings from the study will be used as material by those who might engage in similar study. Finally, the data of this study will help SMEs realize that pandemics are part of human life and so the need to formulate risk management policies.
1.6 SCOPE OF STUDY
The study focuses on the strategies adopted by SMEs to survive the shocks of coronavirus pandemic in Sunyani Municipality. As such it makes use of SMEs statistics and literature in Sunyani Municipality to quantify this research.
1.7 LIMITATION OF STUDY
There are three major limitations in this study that will be addressed.
First, this research work is restricted to the study area and will not be applicable to every SME in the region, let alone the entire country. Again, there will be constraints to access of data and information, due to covid 19 restrictions and returning of questionnaires by some respondents. Also, the time available to study and provide solutions to this research problem is limited.
1.8 ORGANIZATION OF STUDY
The first chapter focuses on the introductory aspects of the research topic. The chapter provides a general introduction to the research in which the review will look at the research topic, background of study, make a statement of the problem, write the topic’s objective including; general and specific and state the research questions and outlines of the study.
The second chapter examines the literature on the performance of SMEs before and during the Corona virus pandemic and also examine existing literature on pandemics that have occurred in the world and their effects on businesses. A historical background of covid-19 and definition of SMEs would also be captured.
The third chapter discusses the methodology of the research. The chapter will cover the detail description of design, techniques and data sources (primary and secondary data) used in carrying out the research.
The fourth chapter looks at the analysis of data and the explanation of the data collected. This involves data processing, data presentation and explanation among other things in order to make the data processed understandable. The interpretation will be made in accordance with the study’s objectives.
The fifth chapter represents the summary of the results, drawing conclusions and finally making recommendation on the findings.
Do you need help? Talk to us right now: (+234) 08060082010, 08107932631 (Call/WhatsApp). Email: [email protected].IF YOU CAN'T FIND YOUR TOPIC, CLICK HERE TO HIRE A WRITER»
