SBA investigating impact of COVID-19 on MSMEs

It is estimated that more than 100 local firms in the micro, small and medium-sized enterprise (MSME) sector have either closed their doors or downsized their operations over the past several months, as the effects of the COVID-19 pandemic continue to be felt across industries.

However, in an effort to obtain accurate numbers, officials of the Small Business Association (SBA) are conducting research to find out the extent of the pandemic’s impact.

In Barbados, a micro firm is one that has five or fewer employees, a small business is one considered to have between five and 25 employees and making up to $1 million annually, while a medium enterprise is one that has between 26 and 50 employees.

It is estimated that there are close to 10 000 formal MSMEs in Barbados.

Chief Executive Officer of the SBA Senator Dr Lynette Holder told Barbados TODAY she was very concerned that there were reports every week of businesses closing or downsizing since the COVID-19 pandemic.

“Anecdotally, we can refer to the fact that we are hearing of four or five firms that have closed every week, but that is anecdotal information.

“Right now, I am working on a research project that is going to allow us to quantify what really has been the impact of this COVID-19 pandemic on the small business sector. That is going to give us some quantitative data,” Holder said, adding that she was hoping the study would be completed by the end of next month.

The last time the SBA completed a comprehensive survey on the sector was in 2016, when it was estimated that there were some 9 302 formal MSMEs and 352 formal large businesses in Barbados.

It was estimated then that 92.2 per cent of firms represent the micro and small enterprises while medium-sized businesses accounted for 4.1 per cent of firms.

That data also showed that about 70 000 people were employed between the MSME firms up to 2016.

There have been several indications this year that several businesses have closed or reduced operations over the past several months.

It was estimated that unemployment skyrocketed from just under 10 per cent last year, to a record of over 30 per cent during the height of the pandemic. And up to last month, the Unemployment Fund of the National Insurance Scheme had paid out more than $123 million to over 32 000 claimants.

The Central Bank also reported last week that Value Added Tax (VAT), excise and import duties were down between April and September this year.

Given the plight of the MSME sector, Senator Holder has called on the agencies tasked with providing financial assistance to move with a lot more urgency in an effort to stem the closure of local firms.

“It angers me that there is no sense of urgency. There is no sense of urgency on the part of too many administrators and technocrats on what is needed to help this sector. There is no sense of urgency. While the grass is growing the horse is starving,” she complained.

Singling out FundAccess, which was capitalised with a special $20 million wage fund from Government, initially for the months of June and July, Holder said she was aware that the entire amount has not been used up.

However, she told Barbados TODAY many of the businesses did not require wage assistance at this stage but help in other areas of their operation.

Pointing out that firms that needed wage assistance had received that support, Holder suggested that the remainder of that fund be repurposed to meet the other needs of companies.

“How long will it take for you to repurpose the fund instead of having millions sitting there?” she questioned.