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COVID-19 and SMEs: supporting small enterprises to avoid a nutrition crisis

18th September, 2020

Today, 2 billion people suffer from an inadequate diet, and the emergence of COVID-19 is only expected to accelerate the number of malnourished and hungry people worldwide. Preliminary assessments suggest that the COVID-19 pandemic may add between 83 and 132 million people to the total number of undernourished in the world in 2020. Small and medium enterprises (SMEs) are on the frontline of tackling malnutrition and, in Africa, provide 70% of the food that reaches low-income consumers. SME’s proximity to local communities means they are well placed to shape their businesses in response to new challenges and consumer demands, and can adapt delivery models as required, especially around last-mile distribution. However, the pandemic is putting a strain on SMEs’ operations with national lockdowns driving up food production and distribution costs, which is likely to result in price shocks, unemployment, bankruptcies and potential food shortages.

Surveying SME needs

To improve the consumption of nutritious and safe food in emerging markets, the Scaling up Nutrition (SUN) Business Network (SBN) mobilises businesses to invest in sustainable food system innovations. Co-convened by the Global Alliance for Improved Nutrition (GAIN) and the UN World Food Programme (WFP), SBN works in 17 SUN countries across Africa, Asia and Latin America to broker partnerships and collaborations between businesses and nutrition actors to build the business case for investment in nutrition.

Recognising the unprecedented impact of COVID-19 on food systems, in May 2020, SBN undertook a survey, which aimed to assess the impacts of COVID-19, the associated control measures on SMEs, and to identify SME support needs across the 17 SUN countries. Responses were received from 363 enterprises, primarily in the processing and distribution sectors, as well as the fruit, grains and vegetable value chains. Key findings indicated that: 94% of SMEs have been impacted by the pandemic, mainly via decreased sales (82%), difficulty accessing inputs (49%), and difficulty paying staff (44%); 85% of respondents anticipated future impacts on their supply chains, including shortages of supplies (61%) and transportation and distribution disruptions (49%); and 81% and 64% of SMEs reported urgently needing financial and technical support, respectively, to cope with the pandemic’s effects.

“Our survey reveals the devastating extent of the pandemic so far on the SME sector, especially for businesses involved in fruit, vegetable, grain, and fish value chains. Decreased sales, difficulty accessing inputs, and reduced production has put businesses, jobs, and access to healthy diets at risk in communities already facing the challenge of malnutrition,” explains Jonathan Tench, SBN Global Coordinator.

The startling survey figures also demonstrate the critical need for SME support to keep local food systems moving, and to ensure the adequate supply of safe and nutritious foods – particularly in low- and middle-income countries (LMICs). “SBN calls on partners to assist us in providing access to finance and technical assistance to keep nutritious food-producing SMEs afloat – and help them build stronger, more resilient businesses with an even greater impact on nutrition, so that they can bounce back from this crisis,” Tench continues.

Challenges and opportunities for emerging innovations

Duo Mitra Raya’s nutritious I-Fit Serealikan drink product is being donated to medical teams fighting COVID-19 in Indonesia

In Indonesia, social enterprise Duo Mitra Raya makes nutritious fish and vegetable-based products to address malnutrition in the country. Like so many other SMEs, the business has faced challenges throughout the COVID-19 crisis, but also, new opportunities. In the wake of the pandemic, the need – and the market – for nutritious goods has significantly increased. And for Duo Mitra Raya, their I-Fit Serealikan drink product, which is made from pangasius (a locally-sourced type of catfish), milk and cereal, is in high demand. “I’ve just sent 1,000 boxes of I-FIT Serealikan to a buyer who wants to donate it to medical teams fighting COVID-19 in hospitals in West Java,” says Rani Meldiyani, founder of the business. Meldiyani explains that the product is being supplied to healthcare workers across the country as it provides the ideal snack for medical staff in need of convenient nutrition.

The company was one of 21 African and Asian nutrition-focused SMEs to take part in SBN’s 2020 SUN Pitch Competition, which was held on 30 July, and provides entrepreneurs with training in business development and pitching before connecting them with investors to scale their innovations. Also taking part, and awarded as 2nd runner up, was Mealimeter, a nutrition-focused SME in Nigeria. Cofounder, Adekunle Jinadu, explains the pandemic’s impacts on the company: “We were in the process of launching in multiple locations when COVID-19 struck. Because most offices are either operating at 20% capacity or totally shut down, we lost revenue.” Mealimeter connects consumers with healthy meal options through a mobile application, and through the installation of IoT-supported vending machines at offices and hospitals.

“Our initial thinking was that companies will need to change how their cafeterias work. We started to offer a ‘safe cafeteria’ service to prepare organisations for the post-COVID world, using technology to reduce or eliminate touch, speech and cash from the office cafeteria,” Jinadu explains. Customers can simply identify and pay for vending machine meals via the Mealimeter app, and scan a barcode at the kiosk to gain access to their purchase.

Emerging as overall winner of the Competition was BabyGrubz from Nigeria, which manufactures complementary baby and infant food products. “COVID affected our access to quality raw material that would have enabled us to open up our supplier network and increase production,” says Oluawseun Sangoleye, BabyGrubz mum-in-chief. But despite the challenges, the company is also adapting to respond to changing consumer needs: “Purchasing power has reduced, hence we decided to create smaller single-use packs to help create more affordable sizes of the products,” says Sangoleye.

Maintaining food resilience

Whilst such innovative solutions are demonstrating evident success and impact at the local – and national – level, SBN is calling for policy incentives, technical assistance and financial support to enable these SMEs to further scale their businesses, and continue to address consumer needs. LMIC governments, for instance, should ensure freedom of movement for key workers in agriculture, whilst adopting effective protection measures to maintain production levels. Productive capacity can also be increased through the provision of grants, lower interest rates, and policies that facilitate business investment.

SMEs should also be connected with community and government feeding programmes to enhance nutritious food distribution, and opportunities to supply schools, hospitals and health workers with perishable foods should be identified to reduce food waste. Technology must also be leveraged to ensure food is kept moving to reach last mile, low-income consumers, which can be facilitated through the support of logistics providers and retailers to raw material producers and processors.

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