As stated by the Andean Development Corporation (CAF): “The measures to mitigate the effects of the COVID-19 pandemic have placed Latin American SMEs in a delicate situation. These companies account for more than 99% of the region’s business fabric and generate about 30% of its GDP, therefore it is essential to protect them.”
For its part, the OECD notes that the COVID-19 pandemic has not only reduced the production capacity of enterprises, but also that the measures to contain the disease through blockades and quarantines have disrupted supply chains, which in some cases means shortages of spare parts and intermediate goods.
Consumers are experiencing a loss of income and fear of contagion, which in turn reduces their willingness to spend and consume. Some surveys on SMEs show that more than half of them have already faced severe losses in income.
The negative effects of COVID-19 will continue to impact businesses for the next 12 to 16 months, and many small and medium-sized entrepreneurs have closed temporarily and fear they will not be able to reopen. Most SMEs are suffering significant impacts from the pandemic.
Many small and medium-sized entrepreneurs are afraid about the viability of their business for the next year. The most affected sectors by the crisis are: construction, automotive, wholesale and retail trade, air transport, accommodation and food services, real estate, professional services and other personal services.
The COVID-19 pandemic has taken us all by surprise. Governments, entrepreneurs, and society as a whole must face the challenges that this entails. We are already beginning to perceive the devastating power of the pandemic and the profound damage and various impacts it is causing on the economy and society.
Recently, the Economic Commission for Latin America and the Caribbean (ECLAC) submitted its report on the “Economic and Social Effects of COVID-19 for Latin America and the Caribbean”, which warns us about the special and unprecedented situation facing the region from a weaker position than that of the rest of the world, in which its economies could suffer a contraction between 3% and 4% or even more serious, depending on the decisions taken by the governments at the national and regional levels.
Governments in the region have immediately responded and measures to contain contagion have progressively been adopted by most countries. In early March, the Permanent Secretariat drafted the document “COVID-19: Summary of the main measures, actions and policies implemented by SELA Member States”, which is updated every fortnight and is published on its Website.
Over the last few weeks, we have highlighted the complexity of sanitary measures, and of the economic, fiscal, commercial, educational and social measures, as well as the extension and variability of quarantine, confinement and social distancing policies, which affect society and particularly the productive sector, particularly small and medium-sized enterprises.
The Permanent Secretariat of SELA has been working on the issue of creating Public-Private Partnerships for Disaster Risk Reduction since 2010; and one of its priorities is precisely “Business Continuity”, so as to help SMEs and SMES to prepare themselves to face disaster situations, considering that they make up to 90% of the business fabric in Latin America and the Caribbean.
In this context, the Permanent Secretariat of SELA has deemed it appropriate to start a Webinar cycle with the purpose of providing practical tools so that entrepreneurs, SMEs and MSMEs can protect themselves against these changing scenarios, which demand capacity for rapid action, reaction and adaptation.