The pandemic’s devastation in poor countries includes major damage to the small- to medium-sized business (SMB) sector, The Wall Street Journal (WSJ) reported.
Lacking the government assistance developed countries are providing to SMBs, their counterparts in the developing world are left to rely on bank loans to try to survive, according to WSJ, but bankers are more inclined to lend money to large companies they perceive as less risky.
Richard Bolwijn, head of Investment Research at the United Nations Conference on Trade and Development, told WSJ that many SMBs in the developing world have failed since the pandemic began, and without those businesses, “no recovery can take place.”
According to UN data cited by WSJ, 70 percent of jobs in the developing world are either through self-employment or working for companies of fewer than 50 employees.
Rizky Eka Valdano, an Indonesian man who rose from poverty by putting himself through college and owned a travel business with 12 employees and a car, lost his business 10 months into the pandemic, WSJ reported. Now, the businessman sleeps in a room adjacent to a friend’s wood shop.
“This is the lowest I’ve ever been,” he told WSJ.
An Indonesian government study cited by WSJ found that since the pandemic struck, 98 percent of SMBs saw revenue drop and 45 percent shed workers.
WSJ used Rizky’s story as an example of how difficult it can be to survive widespread economic devastation. When the travel business he had assiduously built from scratch failed, he turned to providing frozen food for eateries from a borrowed freezer. Then restaurants were forced to close, so he helps friends with their own business’s websites.
But business bills he ran up pre-pandemic, including on personal credit cards, were too much, he told WSJ. His monthly expenses ran about $5,000. The government assistance he received totaled around $160.