Investigating the impact of COVID-19 on SMEs in national food systems

A survey of 327 SMEs in the food system in 14 countries, aiming to assess the impacts of the COVID-19 pandemic and associated control measures on their businesses and their support needs, was undertaken by GAIN and partners, including the Scaling Up Nutrition (SUN) Business Network (co-convened by the World Food Programme (WFP)). This survey took place in October/November 2020, following one in May 2020, results of which are available here.

COVID country reports: assessing national experiences

Building on the global report, which provided an overview of the SMEs in 14 countries’ food systems and their experiences since the onset of the pandemic, four separate country reports were carried out to provide a more in-depth and detailed picture of SME experiences in Kenya, Mozambique, Nigeria and Rwanda.

An average of 46 responses were received in Kenya, Mozambique and Rwanda, and 71 responses were received from Nigeria. Most responses were from micro- or small-sized firms; respondents were primarily firms in the processing and distribution sectors and grains, vegetables, and fruit value chains. About 30% were from women-owned businesses.

The surveys’ key findings included:

• Between 98–100% of responding SMEs in the food system in the four countries reported being impacted by the pandemic, mainly via decreased sales, difficulty paying staff, difficulty accessing inputs, and difficulty accessing financing;
• For most firms, impacts had lessened over time; about 49% and 80% of firms in Nigeria and Kenya, respectively, reported that business operations had improved since the onset of the pandemic while 22% and 35% of firms in Mozambique and Rwanda, respectively, reported that business was essentially ‘back to normal’;
• In Kenya, Mozambique, Nigeria and Rwanda, 83%, 58%, 73% and 78% of firms reported decreased sales as a result of the pandemic, respectively; 96%, 78%, 85% and 89% had changed their production volume (generally decreasing it);
• Future impacts on the supply chain were anticipated by 85%, 82%, 59% and 83% of respondents, in Kenya, Mozambique, Nigeria and Rwanda, respectively, including shortages of supplies and transportation and distribution disruptions;
• Only 21%, 29%, 20% and 11% of firms had received support, in Kenya, Mozambique, Nigeria and Rwanda, respectively. However, 96%, 93%, 93% and 96% of firms in these four countries reported urgently needing financial support to cope with the effects of the pandemic;
• While overall impacts and support needs were similar across women-owned and male-owned/co-owned firms, there were some differences in firm characteristics and in specific needs for assistance. These differences should be taken into account when designing future interventions.

 Adapting to COVID challenges for Nigerian nutrition: a respondent’s experience

One such SME, which responded to questions about how its operations were impacted by the pandemic, was Soupah Limited in Nigeria, whose founder Ifeoluwa Omotayo faced a number of challenges in the wake of COVID. Unfortunately, Soupah Limited, a technology-driven social enterprise which sells fortified soup spices, experienced significant hardships as their products were not amongst the produce most consumers wanted to stock up on at the time and, consequently, sales plummeted. Similarly, the lockdown led to low supply of perishables which culminated in higher prices.

In March and April 2020, the business experienced a 34% loss, which increased to a 53% loss in the subsequent two months. Thus, Ifeoluwa furloughed some staff and ran a skeletal operation; just enough to ensure non-furloughed staff were paid salaries, although these came with significant pay cuts.

The development and implementation of new products and technology has been key to Soupah Limited’s survival. “We noticed that while the processed spices were not selling, fresh fruit and vegetables were in much higher demand, so in April 2020 we started delivering fresh products like tomatoes and peppers at affordable prices to customers in need,” explains Ifeoluwa. Beyond that, Ifeoluwa saw the need to better connect to customers to drive sales, which she achieved through the procurement of USSD codes. These codes, which are shortcodes widely used in developing countries to initiate different transactions have helped her connect to customers who lack conventional internet access. The customers can now access Soupah Limited via USSD and get their products delivered to their doorstep anywhere within Ibadan, Oyo State, Nigeria. “So far, we have seen positive changes. We are receiving an average of 25 orders each day, via USSD,” Ifeoluwa enthuses.

Looking to the future in the ‘new normal’

While the lockdown may be over, many agribusinesses are still overcoming pandemic-related challenges. Following these surveys, and their results, the next steps have become clear if governments and development partners are to support SMEs in recovering from the shock of the COVID-19 pandemic. These include communicating clearly on any future pandemic mitigation actions to be taken in a timely way, so that firms can be prepared and adapt, and providing technical assistance to help SMEs adapt business models, reach consumers online, or adopt processing or packaging to extend products’ storage or shelf life. Also important is to partner with local financial service providers to ensure that firms can build back better by providing a comprehensive package of financial support for SMEs, including short-term low-interest bridge loans to meet immediate needs and adapt businesses in the longer term. Finally, taking into account the differences of women-owned firms when designing future interventions will be critical to ensure equality in opportunities and outcomes for these firms.

As the pandemic continues and comes to an end, it will be important to mitigate the impacts uncovered in this survey and facilitate these opportunities in order to support the ongoing supply of safe and nutritious foods for consumers and stronger, more resilient, businesses over time.

Read the country reports, here:

• Kenya
• Mozambique
• Nigeria
• Rwanda