The Economic Impact of the Covid-19 Pandemic on SMEs in Selected Sub - Saharan African Economies: An Empirical Approach

Ndah Grimbald,Jong Ketuma Henry,Abeja Ekure Martha,Abdallah Ziraba

doi:10.5296/ber.v11i3.18597

Abstract

The Covid-19 outbreak is having substantial economic effects and wreaking havoc on sub-Saharan Africa. The pandemic has unleashed a unique combination of shocks to global commodity markets, disrupting the global supply chain and impacting supply and demand simultaneously. SMEs in lower income countries and particularly in sub-Sahara Africa are bearing the brunt of the economic hardship brought about by Covid-19. To this effect, the purpose of this study is to determine the economic impact the Covid-19 outbreak has on small and medium size (SMEs) enterprises across selected sub-Sahara African economies using an empirical approach to analysis. The phenomenon under study is objectively determined and the source of acceptable knowledge is positivism epistemology. The research approach is a deductive one and the axiological underpinning is value-free. The research paradigm is quantitative method of analysis. A sample of 500 participants from four focus groups namely the Transport sector; Hotels bars & restaurants; retail stores; & tourism sector were randomly selected in Cameroon, Uganda, Nigeria and Zimbabwe. Secondary data was also sourced from the IMF, World Bank, OECD, and AU. Four causal relationships were hypothesized and the findings revealed that financial risks, poor economic performance of SMEs, loss of jobs and rising unemployment have a significant positive impact on the survival of SMEs in sub-Sahara Africa. The main impact of the Covid-19 pandemic will depend on its severity and duration but the consequences are likely to be long lasting.

Highlights

The Coronavirus Disease 2019 (COVID-19) is a respiratory illness triggered by a novel coronavirus called severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that was first detected in December 2019 in Wuhan city in the Hubei province of China (Evans, 2020) as cited by (Brüssow, 2020; Fauci, Lane & Redfield, 2020; Gentile & Abenavoli, 2020; Shang, Yang, Rao & Rao, 2020)
Four causal relationships were hypothesized and the findings revealed that financial risks, poor economic performance of small and medium size (SMEs), loss of jobs and rising unemployment have a significant positive impact on the survival of SMEs in sub-Sahara Africa
The key objective of this paper which was to determine the economic impact of the Covid-19 outbreak on small and medium size (SMEs) enterprises across sub-Sahara African economies was statistically tested based on four hypotheses

Summary

Introduction

The Coronavirus Disease 2019 (COVID-19) is a respiratory illness triggered by a novel coronavirus called severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that was first detected in December 2019 in Wuhan city in the Hubei province of China (Evans, 2020) as cited by (Brüssow, 2020; Fauci, Lane & Redfield, 2020; Gentile & Abenavoli, 2020; Shang, Yang, Rao & Rao, 2020). It is predicted that the world economy may likely enter into a recession in the first half of 2020 due to the direct and indirect effects of the crisis such as shocks in supply and demand, commodity slump and the fall in tourism arrivals (African Union, 2020). According to Africa Centre’s for Disease Control (CDC), the spread of the virus has reached 55 African Union Member States with 4,508,664+ cases; 120,219 deaths and 23,095 recoveries as of April 2021. This dangerous and rising trend is showing no signs of slowing down in Africa, because of its openness to international trade and immigration.

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