Micro, Small and Medium Enterprises Development Sector
Addressing the Impacts of the COVID-19 Pandemic to Women Entrepreneurs
The COVID-19 pandemic hits the economies and women around the world. The physical distancing, travel bans, and varying levels of community quarantine/lockdown being implemented immensely affect the sectors where women work predominantly and with a high concentration of women-owned/run micro, small and medium enterprises (MSMEs).1
In its 2019 List of Establishments, the Philippine Statistics Authority (PSA) recorded 1,000,506 business enterprises operating in the country. Of these, 99.5% (995,745) are MSMEs.2 For the same year, the Department of Trade and Industry (DTI) recorded a total of 630,688 business name registration (new and renewal); 55.8% (352,181) were women-owned/run.
Luzon’s enhanced community quarantine (ECQ) was in place, and various containment measures were also implemented in other locations from April 28 to May 16, 2020. During this period, the United Nations Industrial Development Organization (UNIDO), in collaboration with the DTI and other partners from the government, private sector, the academe, and other development partners, embarked on the “Assessment of the Socio-economic Effects of COVID-19 and Containment Measures on Philippine Enterprises.”3 There were 235 respondent firms, 69% of which were microenterprises. About half of these firms were in the manufacturing sector, predominantly producing finished goods mainly for the domestic market. This segment also accounted for a more considerable proportion of youth-led and women-owned firms that had been in operations for three years or less.
Furthermore, among the various findings, the assessment notably revealed that most firms experienced difficulties coordinating their supply/value chains leading to shortages in raw material supply and impediments in distribution, shipping, and logistics. These were felt more by the microenterprises and the domestic-oriented firms. Challenges were compounded by most firms not having transparent and responsive plans for business continuity, especially during extraordinary situations.
The abovementioned issues were affirmed by the rapid survey conducted by the Project Management Office (PMO) of the Supporting Women’s Economic Empowerment (WEE) in the Philippines Project or GREAT Women Project 2, through its Local Area Coordinators (LACs), to determine the immediate effects of COVID-19 on the women micro-entrepreneurs (WMEs) across the priority regions of the project.4
Out of the 831 enrolled WMEs under the WEE Project, only 441 or 53.07%, participated in the electronic survey. Results show that the majority of the WMEs have temporarily suspended their business operations and have already terminated workers, resulting in loss of income for both parties. Among the challenges experienced by the WMEs include:
- Lack of access to resources to transport their raw materials/products from/to suppliers and buyers.
- Limited to no access to other market platforms to sell their products.
- Unavailability of and limited knowledge to develop business continuity/disaster resiliency plans.
- Limited to no access to essential services and support to entrepreneurs and their workers.
- Lack of access to programs and services to rehabilitate their business.
As the country moves forward from the COVID-19 pandemic, it mitigates disproportionate impacts on women entrepreneurs. It responds and targets women in all aspects of economic recovery, creates stimulus plans, and implements programs to ensure that efforts are gender-responsive, inclusive, and sustainable.
KEY ISSUES FACED BY WOMEN ENTREPRENEURS
DIGITALIZATION. With the physical distancing and mobility restrictions implemented, digitalization is no longer an option but an imperative nowadays. Based on the records of the DTI, there are 85,074 new business name registrations (as of October 23, 2020) under the retail sale via the internet (business activity). Of these, 84% (70,199) are women.5
In 2019, DTI’s data shows that 64% of their MSMEs assisted by Negosyo Centers were women. Similarly, 64% of the 5.8M individual members of the coops in the National Association of Training Centers for Cooperatives (NATCCO) are women. In a survey conducted by the DTI from June 4 to 17, 2020, when community quarantines were imposed, 26% of over 2000 MSME respondents ceased operations, 52% went on partial operations. On the other hand, only 22% of partially operated remained in full operation. Meanwhile, 91% reported a decline in sales, and 74% reported a decrease in the workforce.6
E-commerce and other online modalities are helpful in selling, marketing, and managing enterprises at this time. However, based on a recently conducted Digital Readiness Study, while most have started their digital journey through popular social media sites like Facebook, women entrepreneurs need more knowledge and skills to optimize the digital platform and convert engagement to sales.7
Furthermore, the PMO of the GREAT Women Project 2 noted from its rapid survey that despite the health and safety risks of face-to-face interactions during the pandemic, most of the respondents still consider trade fairs as critical support to WMEs. However, significant events such as the Manila FAME, National Arts and Crafts Fair, National Food Fair, ArteFino, and regional trade fairs have been canceled. During the “Roundtable Discussion with Stakeholders from the Homestyle and Wearables Industry” held last July 6, 2020, it was tackled that the interest of WMEs in this mode of marketing and selling is linked to no or limited access to devices and internet connectivity as well as limited knowledge/skills in maximizing the benefits of the internet and other online/e-commerce platforms.
BUSINESS CONTINUITY AND FINANCING. As revealed by the two studies cited earlier, the unavailability and limited knowledge to develop business continuity/disaster resiliency plans are challenges of microenterprises nowadays.
The UNIDO assessed and reported that the majority of firms that were not able to operate, despite being permitted to, did not have business continuity plans. Consequently, it affected their ability to ensure the availability of raw materials, efficient transport of goods and human resources, and the implementation of workplace safety measures during crises.
In terms of financing, most firms have identified cash flow as one of the biggest challenges they expect to face during recovery. The UNIDO flagged that a higher proportion of microenterprises–female owners and owners 50 years old and below–did not apply for a loan in the past two years. This indicated concerns about the inclusivity and accessibility of loan facilities for specific groups.
In the rapid survey conducted by the GREAT Women Project 2, out of 12 interviewed WMEs across all levels and from varying industries, only two Level 1 WMEs and two Level 2 WMEs availed of government assistance for business recovery. Notably, the two Level 2 WMEs mentioned applied for the Department of Agriculture’s SURE Aid Program but have not received any feedback since June 2020. Other WMEs were unaware and did not know government assistance offered for businesses. All Level 3 WMEs mentioned in the interview were aware but did not avail of any government aid for business because of too many documents needed in the application process.
ACCESS TO SUPPORT SERVICES. There were 285 respondents who participated in Wave 2 of the MSME Value Chain Rapid Response Survey of the United Nations Development Programme;8 56% were female, 42% were male, 1% were LGBT+, and 1% chose not to disclose their gender. According to this survey, three months after the implementation of the ECQ, only 17.5% of them received assistance from the national government, 10% from LGUs, and a smaller percentage from other sectors such as own suppliers/customers (4%), NGOs (3%), and other private sector not part of the MSMEs’ supply chain (2%).
Specifically, more male respondents (41%) received assistance from at least one stakeholder compared to female respondents (32%). A higher percentage of male respondents received wage subsidies, deferred loan payments, loan assistance, and technical assistance, while the female group had a higher rate of respondents who received subsidized rents and other types of assistance (primarily grocery and food packs).
MULTIPLE BURDEN. Prevailing socio-cultural norms in the Philippines place the majority if not all of the unpaid care work under the responsibility of women.
In the context of the COVID-19 pandemic, the burden of unpaid care work on women is evident as they increasingly provide even greater support to family members, such as maintaining sanitary conditions at home and caring for sick family members, putting themselves at increased risk of becoming infected. Women in the formal and informal sectors also balance work/business with housework, childcare, and/or elder care.9
In April 2020, an online survey with 16 women-led companies, conducted by the UN Women-WeEmpowerAsia and Investing in Women, revealed that the COVID-19 pandemic likewise affected the employees of women-led businesses. Companies observed the balancing act of paid and unpaid work for both women and men employees, noting that while men were now actively involved in household work, the majority is still undertaken by women.10
For the Cacao industry of the GREAT Women Project 2, a study shows that the WMEs and their workers (mostly women) now face the burden of increased household chores as family members lose work and children stay at home unable to go to school. Gender-related concerns set in, and women now face multiple burdens of managing the house and contemplating how their businesses can recover.
The Rapid Survey of the GREAT Women Project 2 reported that multiple roles and responsibilities, multi-level and crosscutting issues of WMEs related to enterprise and gender were magnified by the results of the pandemic. This translated the WMEs low assessment on their level of happiness, life satisfaction, and overall wellbeing. Furthermore, the feelings of nervousness, stress and pressure registered high among the H&W WME respondents. Lastly, data showed that most WMEs were worried about their state of mental health.
1 The Philippines employs two criteria in operationally defining MSMEs, namely employment and asset size. The PSA classifies an enterprise as a micro if it has less than 10 employees, small if it has 10-99 employees, medium with 100-199 employees, and large if it has 200 or more employees. On the other hand, the Magna Carta for Micro, Small and Medium Enterprises (MSMEs) classifies an enterprise as micro if it has up to Php 3,000,000 asset size, small if it has Php 3,000,001–15,000,000 asset size, medium if it has Php 15,000,0001–100,000,000 asset size, and large if it has Php 100,000,001 and above asset size.
2 DTI. (n.d.) 2019 MSME Statistics. Retrieved from http://www.dti.5ucf.com/resources/msme-statistics/
3 UNIDO. (2020). Assessment of the Socio-economic Effects of COVID-19 and Containment Measures on Philippine Enterprises. Retrieved from http://dtiwebfiles.s3-ap-southeast-1.amazonaws.com/COVID19Resources/Reports/Philippine+SME+Assessment+FINAL+REPORT.pdf
4 PCW WEE Project Management Office Supporting Women’s Economic Empowerment (WEE) in the Philippines Project (GREAT Women Project 2). (2020). WEE Project Study on the Immediate Effects of COVID-19 to Women Micro Enterprises
5 From the presentation of DTI Assistant Secretary Mary Jean T. Pacheco during the W-GDP Webinar Series on Women’s Economic Empowerment, No. 3: Making Online Business Work for Women MSMEs, October 23 2020
6 DTI. (2020). Empowering Pinay entrepreneurs through digitalization. Retrieved from http://www.dti.5ucf.com/archives/news-archives/empowering-pinay-entrepreneurs-through-digitalization/?doing_wp_cron=1609048159.6310379505157470703125
8 UNDP. (2020). MSME Value Chain Rapid Response Survey (Wave 2). Retrieved from http://dtiwebfiles.s3-ap-southeast-1.amazonaws.com/COVID19Resources/Reports/MSME+Value+Chain+Rapid+Response+Survey_Wave+2.pdf
9 UN Women. (2020). Gender Snapshot: COVID-19 in the Philippines. Retrieved from http://asiapacific.unwomen.org/en/digital-library/publications/2020/04/gender-snapshot-covid-19-in-the-philippines
10 UN Women. (2020). Gendered dimensions of COVID-19 in the Philippines. Retrieved from http://asiapacific.unwomen.org/en/digital-library/publications/2020/06/gendered-dimensions-of-covid-19-in-the-philippines