EFFECTS OF COVID-19 ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN THE WESTERN AREA OF SIERRA LEONE

Abstract

<p>The study aims to investigate the effect of COVID-19 on the performance of SMEs in the Western Area of Sierra Leone. An econometric model is used to investigate the effect of COVID-19 on the determinants of SME performance in the Western Area of Sierra Leone. Using a confidence interval of 95 and a margin of error of 2 percent, a total of 450 SMEs were randomly selected from the population of SMEs in the Western Area of Sierra Leone from 2018 to 2020. In the OLS, the firms are considered homogenous while in the random effect regression, they are heterogeneous. The fixed effect is not investigated here because the model has dummy variables, which do not vary over time across firms and including them in a fixed effect model provides no coefficient for the pre-pandemic period and 2020 is the pandemic period. The results reveal that capital productivity and labour productivity have positive effects on SME performance in the Western Area of Sierra Leone with the productivity of capital having an elasticity of 0.20 in the pre-COVID-19 pandemic and that of labour being 0.64 in the pre-COVID-19 pandemic. Leverage has negative effect on firm performance in the pre-COVID-19 pandemic but it has no impact during the COVID-19 pandemic. Gender difference does not matter during the pandemic. Professional training of SME heads without distinguishing recent or old did not matter for SME performance. However, the educational status of SME heads matters for robust SME performance but its impact is stronger during the pre-pandemic than the pandemic era.</p><p> </p><p><strong>JEL:</strong> F13, F15</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0787/a.php" alt="Hit counter" /></p>