Introduction
The global economy faces its greatest danger since the fnancial crisis. COVID-19 has disrupted people’s lives as well as the global economy. Restrictions on the movement of people, goods, services and containment measures have impacted daily laborers, freelancers, SMEs and corporates. In 2020, the African economy was expected to experience change. In the coming years, it is expected that new jobs will be created, others will be lost, consumer patterns will change and new products will be introduced. In addition, health and hygiene will be increasingly important in consumer decision making. While this change will be widespread in all sectors, small businesses in the informal sector will likely be the most afected. The African Union (AU) through the Citizens and Diaspora Directorate (CIDO) has implemented a COVID-19 Citizens preparedness response survey. The results of the survey demonstrate that the most vulnerable communities are those living in densely populated areas, and businesses: MSMEs and the informal sector. Thus, The African Union, UNDP and AfriLabs collaborated together to help mSMEs to overcome this challenging situation. From March to August 2020, The partners had several meetings addressing this issue and decided to test Rollo business simulation in 5 diferent countries representing the 5 regions. The discussion involved many other local partners and local experts to better understand local needs. The implementation of the simulation started from August 2020 and ended in January 2021. In fact, Half of all workers in Africa are considered to be self-employed, the vast majority of which within the informal sector. Around 40% are employed within Micro/Small and Medium MSMEs sized businesses. Large businesses account for only 15% of total african employment but nearly 40% of all the formal jobs on the continent. Mckinsey Global Institute expects that one-third of all jobs in Africa are infuenced by the pandemic. This includes nearly 150 million jobs afected by losses or salary reductions. This will directly impact jobs in retail and wholesale, manufacturing and construction, which make up to 60% of all jobs in the formal sector and 80% of jobs in the informal sector. The study also predicts that the agricultural sector, which employs a large fraction of the region’s workforce and vulnerable communities, will be negatively afected resulting in approximately 20 million jobs lost or experiencing salary reduction. COVID-19 threatens to create multiple challenges for SMEs across the African continent: ● A change in consumer behaviors, resulting in drop in demand and revenue loss. ● A drop in business continuity including delayed payments without enough revenue compared to ongoing expenses like rent, utilizes, bills. ● Cash burn and inability to pay forces SMEs to reduce salaries or close business. ● Businesses are forced to add new protection measures to contain the virus which increases the running costs. ● High risk of infection within employees and customers in crowded businesses areas. Governments in Africa have committed a total of 7.5 billion USD and economic stimulus packages to support recovery from COVID-19 restrictions. This will include through credit guarantees, credit reliefs, and low-interest loans. In march 2020, the Central Bank of Egypt approved a 6 months long fnancial regulatory framework to support small business. This framework includes a hold on loans and credit card payments, increase of withdrawal limits, cancellation of bank fees and commissions for ATM withdrawal and suspended penalties for late payments. It also includes a lowered interest rate by 3% and a debt relief initiative to support around 1 million borrowers.
3
Made with FlippingBook - Online Brochure Maker