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COVID-19 & Private Sector Development (PSD)
Top NewsIn the Webinars on “Responding to COVID-19 and saving jobs in non-farm sectors: experiences from two SDC projects” we heard about first experiences from projects in Bangladesh and Moldova and how they adapted their strategies to respond to the COVID-19 pandemic. From Bangladesh, we learned how the project is reorienting its strategy to support jobs in the ready-made garment sector. From Moldova, we heard how the project supports partners, for example, in setting up an e-commerce system for food or online trainings for ICT skills. >> see the recordings
Best practicesCovid-19 challenges projects on private sector development. Read more about some of the emerging best practice examples of the Covid-19 response by SDC projects on private sector development.
Problem Statement Impact on Global Economy and MSMEsThe current Covid-19 pandemic has an impact on the global economy. Micro, small and medium enterprises (MSMEs), including self-employed people, are threatened in their existence. MSMEs are the backbone of many economies, in particular in developing and emerging countries, and generate a majority of jobs. The current situation is causing widespread disruptions in trade and economic activity due to physical restrictions, international travel bans, closure of businesses (markets, shops, restaurants, banks, ATMs, etc.) and educational institutions. While medium to long term impacts on the global economy are still unclear, there is a serious threat of global recession with all major regions affected. This said, businesses in different sectors are affected differently; for instance, collapse of tourism industries vs. growing demand for ICT services. Multi stakeholder action is neededMany MSMEs will not be able to survive unless urgent action is taken to bring them out of the current bleak situation in which they find themselves in. Such action is needed from both national government and international donors and organisations. International donors such as SDC and providers of technical assistance will need to adjust and adapt programmes and activities to respond to the needs of MSME’s and support cushioning the short-term as well as medium and long-term effects and include emergency measures of including a basis minimum income for the poor and those in the informal sector. At the same time, they need to focus on maintaining physical safety of international and national project staff and ensure continuous employment of national staff in country and project offices. Certainly, it will be very difficult for SDCs Private Sector Development (PSD) projects to achieve the expected results in terms of poverty reduction through MSME growth. To the contrary, additional efforts to safeguard past achievement need to be undertaken.
In short and in long term, the partners (local private sector and other partners) are facing and will face a number of issues caused by the Covid-19 pandemic and its corresponding measures. These issues affect the implementation of SDC PSD projects. The following non-conclusive overview outlines possible short and long-term issues and gives example of mitigation strategies, tools and good practices to address them and will be updated regularly.
CHALLENGESExamples of short-term issues/ consequences
| MITIGATIONPossible strategies, tools and good practices for mitigation |
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Business structure change to web-based solutions due to restrictions in physical movement: Lockdowns in many countries lead to severe restrictions on the conduct of business and freedom of movement. Business structures must be adapted, e.g. home office introduced, e-commerce launched. In SDC's partner countries, however, many of the partners are not trained in this and urgently need support for this transition | - Support the establishment of national advisory call centres where businesses can discuss issues and get help
- Offer support in quickly operationalizing digital work (e.g. online exchange platforms) and service channels (e.g. e-commerce) and events (e.g. virtual trade fair)
- Offer relevant capacity building through digital tools and electronic channels, e.g. e-seminars and e-trainings. Adapt capacity building offer to time constraints due to care work increasing work load
- Train workers for e commerce – packaging, delivery, web and mobile based support.
| Liquidity shortage: Lockdowns in many countries lead to the majority of the economy stagnating. This reduced economic activity leads to a strong or complete decrease in revenue, while fixed costs remain. As a result, many companies, especially MSMEs, will experience severe liquidity shortages | - Support and catalyse access to emergency funds, both national and international, including possibly SDC-led initiatives: BMZ-funding opportunity
- Provide information to private sector partners on available funds, their access requirements, and support access process etc.
- Support the negotiations for interest rate cuts, grace periods, debt restructuring, etc.
- Be aware of constraints for women’s access to finance when addressing liquidity shortages for female-led businesses
| Risk of enlarged gender gap: Girls and women are more affected by crises (e.g. restricted mobility, increased childcare due to school closure and care of the sick at home, in some context harmful social norms, such as increased early marriage or increased gender-based violence during crises) | - Analyse the differences in the effects of the Covid-19 pandemic for women and men from the outset
- Develop/Support gender-specific solutions, e.g. mobile hotlines to mitigate and respond to these risks
| Lack of human resources due to sector-specific shifts in demand: While many sectors have been badly affected by the pandemic, certain sectors face a strongly increased demand, but are unable to cover their human resources due to limited freedom of movement. This affects, for example, grocery stores that have an increased need to refill their shelves, health centres that need more medical staff, but also cleaning staff due to the increased hygiene regulations, and IT companies due to increased demands for digital solution. Also affected are seasonal businesses, such as in agriculture, which depend on national and international seasonal workers, but who are currently unable to travel | - Supporting businesses in sectors affected by lack of human resources to use for matching supply and demand of labour (online job portals, radio/TV channels, print media).
- Supporting publicising such platforms so that temporarily unemployed people can offer their labour.
- Supporting development of matching services, preferably online job portals, and link with skills development for short term online training, encouraging in particular women’s participation to avoid unfair share of family responsibilities
| Restriction of movement and liquidity shortages leading to self-employed / microentrepreneurs losing their income basis: Certain economic activities, especially in the informal sector and non-farm activities, are hampered entirely (e.g. tourism sector) and may not be bridged by the above-mentioned adaptations and access to finance. | - Supporting access to wage labour (see point above)
- Supporting taking advantage of entrepreneurial opportunities (e.g. soap production, fresh food production, etc.) while avoiding setting up parallel structures. See Guidance in the Minimum Economic Recovery Standard and its related note on Covid-19 response
- Analyse entrepreneurial opportunities with a gender lens and identify the business case for female-led enterprises (e.g. production close to home)
| Lacking support from government: Governmental partners struggle to take early actions in support of MSMEs | - Support analyses of socio-economic consequences of the global health crisis including gender lens analysis
- Follow the economic implications closely and develop quick checklists of good practices and pitfalls, e.g. share good practices on governmental economic recovery programmes in coordination with international donor community.
- Policy dialogue
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Many of the above issues will continue in the medium to long term. Additionally, the following issues and responses may emerge: CHALLENGESExamples of short-term issues/ consequences | MITIGATIONPossible strategies, tools and good practices for mitigation | Declining economic growth: This leads to more restrained spending by the population, which in turn reduces business turnover and affects marginalized people disproportionally | - Support MSMEs in adapting their business model
- Provide support in product development and marketing to adapt to increased competition
| Dysfunctional “conventional” value chains: Global supply chains are seeing disruption in the supply of components, such as machinery or fabrics. It matters how countries are integrated into such value chains and how diversified these are – those integrated most will be hit hardest | - Support local economies
- Support digitalisation in value chains and business models (e.g. e-commerce)
- Support the adaptation of product lines and components
| Sector-specific shifts in demands: Certain professions are in high demand (e.g. IT), or new professions or fields of employment | - Sector-specific analyses
- Support identifying new markets (e.g. job creation potential in IT sector in developing countries due to increased demands for digital solutions)
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Relevant News
10 June 2020
In late March 2020, the government of Mozambique instituted a strong response to the Covid-19 pandemic, which caused major disruptions to the economic activities of smallholder farmers and their supporting input providers and output marketing agents. The Swiss Agency for Development and Cooperation’s (SDC's) Innovations for Agribusiness (InovAgro) project has worked to support relationships between market actors in Northern Mozambique since 2011. The DAI implemented InovAgro project leads initiatives to develop stronger, more inclusive, commercially driven and competitive market systems for agricultural input supply to smallholder farmers and output marketing (the efficient sale by smallholder farmers of their production). Over the past 6 years, support initially driven by InovAgro and later complemented by some other donor projects, have helped the market systems for agricultural inputs and output marketing to evolve greatly, expanding in numbers of participants, volumes of sales and purchases and improved relationships. Now, as Covid-19 restrictions change the ways businesses and farmers must operate, Mozambique’s deeper and more diversified market systems are demonstrating their resilience and their ability to continue to service smallholder farmers who would normally fall out of the system. InovAgro’s targeted support to build stronger market systems is allowing many agribusinesses to operate in conjunction with their partners to continue to deliver their products and services for the benefit of smallholder farmers, without the need for outside assistance. Characteristics of a resilient market systemDeeper and more resilient market systems are characterized by effective cooperation and good competition which stimulates innovation. Value chain actors trust and mutually benefit from one another as they sell to, and buy from, the rural poor. A resilient market system also has a large and diverse population of market actors, with more overlap of abilities to carry out different functions, but also greater specialization of roles to deliver the service most appropriate to the business. In a resilient market system, it is not expected that every market actor remains in a time of crisis; in fact, some will fail and fall out of the system but the ones with the best relationships will continue to operate and be able to meet demand. In Northern Mozambique, the numbers of market actors have increased significantly in the input and output marketing sectors. Many new entrants, especially in the seed sector, are working to continue to deliver services. The market actors in both the input supply and output marketing systems have become better coordinated and many in the range of market actors have built trust based on win-win relationships in recent years. Market Resilience Responses by the Input Supply SystemInput suppliers have introduced adaptive responses such as innovative training models for farmers, new distributor strategies, engaging more local partners, and sharing information about COVID-19 prevention. Seed companies, distributors, and agro-dealers are training lead farmers to run smaller, field days at their demonstration sites in local villages, reducing the need to travel into the rural areas. Thanks to these developments, value chain actors can now respond to joint threats, such as the restrictions enacted to combat Covid-19, and opportunities, such as selling more directly to smallholder farmers through stronger distribution channels. These mutual benefits incentivize collaboration and create long-term, interdependent relationships with embedded services and joint marketing, leading to steady growth in sales. Market actors have also developed strong relationships with local community leadership and government agencies, increasing their social license to operate in target communities and districts. Distributors are upskilling agro-dealer partners with more technical information. Agro-dealers are using village-based agents (VBAs) and lead farmers to order inputs and introducing mobile retail shops to deliver the inputs, serving the 19,744 farmers accessing improved inputs in 2019. Market Resilience responses by Output Marketing SystemMany traders whom InovAgro has supported to expand their networks of transparent buying posts deep in rural areas and build a strong social license to operate, are operating “business as usual” notwithstanding the Covid-19 restrictions. With local buying posts, more than 29,000 smallholder farmers are better able to market their product safely, close to their homes and not risk exposure travelling to the peri-urban markets.
ConclusionNorthern Mozambique’s deepening market systems, supported by InovAgro and others, have enabled the private sector to respond to the Covid-19 pandemic in ways that would have been impossible six years ago. Good competition is stimulating the numbers of market actors in general. Good collaboration and coordination between those market actors to achieve mutual benefits are making the agricultural industry stronger, more adaptable to challenges, and better able to withstand negative impacts of the Covid-19 control measures. Farmers are also benefiting from this improved system, which is providing them with vital information on Covid-19 and closer access to marketing outlets and input suppliers. Most importantly, market actors are adapting in ways that limit the need for outsiders—who may be carrying the disease—to travel to rural communities. The deeper market system has also facilitated InovAgro’s continued support. InovAgro has served as a trusted advisor to input supply companies, output marketing companies, and the regional government, whose livelihoods are now on the line. These strong relationships have made interventions to support the market actors easier for InovAgro to collaboratively design and implement and have ensured the project can help address companies’ ongoing core challenges in the face of a global pandemic.
Here you can find the full case study
Relevant Events
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11 Jun 2020
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10 Jun 2020
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29 May 2020
online
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15 May 2020
11 Jun 2020
11 June 2020
11 June 2020
11 June
In the Webinars on “Responding to COVID-19 and saving jobs in non-farm sectors: experiences from two SDC projects” we heard about first experiences from projects in Bangladesh and Moldova and how they adapted their strategies to respond to the COVID-19 pandemic. From Bangladesh, we learned how the project is reorienting its strategy to support jobs in the ready-made garment sector. From Moldova, we heard how the project supports partners, for example, in setting up an e-commerce system for food or online trainings for ICT skills. RecordingsBelow you can see the recordings from both webinars - Webinar on Wednesday, 10 June
- Webinar on Thursday, 11 June
Stefan Butscher, Deputy Director of Cooperation, Swiss Cooperation Office Moldova
Elene Tkhlashidze, Programme Lead at the SDC's Optim project in Moldova, HELVETAS Swiss Intercooperation
Derek George, Deputy Director of Cooperation, Embassy of Switzerland in Bangladesh (Webinar Thursday 11 June)
Ameena Chowdhury, Programme Manager – Income and Economic Development, Embassy of Switzerland in Bangladesh (Webinar Wednesday, 10 June)
Moderator Marcus Jenal, Partner at Mesopartner
10 Jun 2020
10 June 2020
10 June 2020
10 June
We invite you to join the Webinar on “Responding to COVID-19 and saving jobs in non-farm sectors: experiences from two SDC projects”. We will hear about first experiences from projects in Bangladesh and Moldova and how they adapted their strategies to respond to the COVID-19 pandemic. From Bangladesh, we will hear how the project is reorienting its strategy to support jobs in the ready-made garment sector. From Moldova, we hear how the project supports partners, for example, in setting up an e-commerce system for food or online trainings for ICT skills.
Below you find some additional information on the two projects:
Dates:
How to join the webinar - To join on your computer, open this link for Wednesday and this link for Thursday. If you use your office computer, the link will open with your Skype for Business (if installed). If you don’t have Skype for Business installed, copy the respective link and open it with your Internet Explorer or any other browser (except Firefox!)
- To join with your smartphone or tablet, download the Skype for Business App, and then open this link for Wednesday and this link for Thursday.
- To join via phone, call (+41584646973), using conference ID 3226333364 (for Wednesday) and 3348555586 (for Thursday)
Speakers Stefan Butscher, Deputy Director of Cooperation, Swiss Cooperation Office Moldova
Elene Tkhlashidze, Programme Lead at the SDC's Optim project in Moldova, HELVETAS Swiss Intercooperation
Derek George, Deputy Director of Cooperation, Embassy of Switzerland in Bangladesh (Webinar Thursday 11 June)
Ameena Chowdhury, Programme Manager – Income and Economic Development, Embassy of Switzerland in Bangladesh (Webinar Wednesday, 10 June)
Moderator Marcus Jenal, Partner at Mesopartner
29 May 2020 in online
29 May 2020
29 May 2020
in online
29 May in online
15 May 2020
15 May 2020
15 May 2020
15 May
In the 3rd Webinar of the series we highlight the impact of the crises on service delivery to farmers and other value chain actors and on potential mechanisms to cope with restrictions and challenges posed to supplying service in times of the crisis.
The Webinar will explore the perspective of several service delivery channels (private, public, farmer organisations) and highlight coping mechanisms that are evolving in Asia and beyond in efforts to maintain certain levels of necessary service delivery to the sector. More information here.
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