Coronavirus: 92pc of SMEs facing supply chain disruption

LAHORE: About 92 per cent of the small and medium enterprises (SMEs) sector, which is considered the backbone of an economy,is facing supply chain disruption in the wake of lockdown due to coronavirus, according to a survey.

The Small and Medium Enterprises Development Authority (SMEDA) conducted an online survey to assess ‘the impact of Covid-19 on SMEs’.

According to the survey, 95 percent of the businesses have reported that COVID-19 and the subsequent lockdown caused a reduction in their operations; 92 percent have complained a disruption in their supply chain and 23 percent have reported total loss in their export orders. The survey report highlighted the issues being faced by SMEs during lockdown and its impact on employment and production.

The report stated that increasing unemployment has been a major issue during the lockdown and 46 percent of surveyed businesses have laid off some of their employees. However, 26 percent reported that they will rehire their employees in one month, after the end of lockdown. 

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Nonetheless, 89 percent of SMEs are facing financial issues while 60 percent have reported issues in selling their product/service and have thus identified areas for public sector support to sustain their businesses and mitigate the impact of COVID-19.

These areas include; SME-specific support measures including financial packages, tax relief, guarantees and grants, relaxation in payments of utility bills, support in paying salaries and easing conditions for loan repayments.

It was noticed by SMEDA that the business community, particularly the SMEs were complaining to be badly affected by the partial lockdown because of the Covid-19 pandemic. The economy was witnessing sluggish growth in services, manufacturing and agriculture sectors followed by an increase in unemployment, decrease in government revenue, decline in exports and disruption in supply chains.

Thus, in order to assess the real Impact of Covid-19 on SMEs, an online survey was launched by SMEDA on April 3, 2020 from April 14, 2020 in which 920 businesses participated from all across Pakistan.

These 920 businesses have an estimated total annual sales turnover of Rs29 billion and employ an estimated 19,641 employees. Moreover, these businesses also employ an estimated 8,950 daily wagers. Most of the businesses are small in size. 33 percent of respondents have an annual sales turnover of up to Rs1 million and 34 percent employ 1 to 5 employees.

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