Economic Recovery "Slow" for SMEs in Iraq

Economic recovery is slow for SMEs in Iraq during the second year of COVID-19

To measure the impact of COVID-19 on small- and medium-sized enterprises (SMEs) in Iraq, the International Organization for Migration (IOM), the Food and Agriculture Organization (FAO), and the International Trade Center (ITC) conducted a panel study of 716 SMEs, covering June 2020 to June 2021.

IOM, FAO and ITC have now released the Panel Study IV: Impact of COVID-19 on Small- and Medium-Sized Enterprises in Iraq report. The study found that recovery from the economic slowdown produced by the COVID-19 virus has been sluggish in the surveyed SMEs. Roughly 25 per cent of the businesses was "very concerned" about recovery from the COVID-19 crisis.

The 716 surveyed firms are located in 15 governorates with activities spanning 16 economic sectors, mainly in the food and agriculture sectors. The study assessed the impact on these firms when compared with non-agricultural businesses.

The first case of COVID-19 was confirmed in Iraq in February 2020; since then, almost two million cases have been recorded. The new report presents the findings from four rounds of data, collected between June 2020 and June 2021, covering the effect of border closures and lockdowns on revenue, production, and employment; accessibility of resources or ability to sell products; and mechanisms adopted to cope with the crisis.

Almost all firms reported reductions in revenue in the early months of the pandemic, on average of 23 per cent between February and November 2020. By October 2020, revenue began to slowly recover. However, by the end of the study period in June 2021, the SMEs' average monthly revenues hovered at around 60 per cent of pre-COVID-19 levels.

Between December 2020 and June 2021, 80 per cent of the SME owners who indicated they had taken on debt had done so due to the COVID-19 crisis. Most of those SMEs did so via informal means, such as borrowing money from friends and family.

On average, SME owners had lost two employees from their workforce between February, when lockdowns began as measure to control the public health crisis, and June 2020. However, by June 2021, over a year into the pandemic, SME owners had only one less employee compared to February 2020 meaning they were able to either re-hire staff or recruit new employees.

The ratio of male to female workers fluctuated throughout the pandemic. In February 2020, the SMEs in the study averaged one woman per 14 men. This ratio peaked in August 2020 at one woman per 20 men, suggesting a widening of the gender gap during this period.

The study was supported by the U.S. Department of State, Bureau of Population, Refugees, and Migration (PRM) and the European Union.

Click here to download the full report.

(Source: UN)

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