The Impacts Of COVID-19 On Women-Owned Businesses

As per a report by the Central Bureau of Statistics (CBS), 29.8 percent of the enterprises in Nepal are owned by women, which are 247, 880 in number.

Aug. 1, 2020, 8:32 a.m.

Several events in the history have shown that the crises have hit the most vulnerable and marginalized population the hardest. Amongst all, women have been affected by the impacts of the crises more than anyone else and the COVID-19 situation is no different. Several studies and reports show that the socio-economic impacts of COVID-19 has affected women disproportionately compared to men. Women are already the most vulnerable and disadvantaged population and the onset of the COVID-19 has maximised the inequality and discrimination against them to a greater extent. Worldwide, the economic repercussions of COVID-19 has been felt more intense for women than their male counterparts; Nepal being no exception.

In the recent years, huge number of enterprises in Nepal is owned by women. According to the first-ever National Economic Census 2018, nearly one-third of the businesses in Nepal are owned by women. As per a report by the Central Bureau of Statistics (CBS), 29.8 percent of the enterprises in Nepal are owned by women, which are 247, 880 in number. This is a good sign that women in the Nepalese society are slowly coming out of their traditional roles and becoming economically independent through businesses.

Amongst all the businesses, there is high percentage of women's involvement in Small and Medium Enterprises (SMEs) in Nepal. 60 percent of the SMEs are owned by women entrepreneurs says the Federation of Small and Medium Enterprises Nepal. In a highly volatile situation like COVID-19, businesses as such have been exponentially affected and this impact doesn't seem to subside anytime soon with the chances of second wave of the virus to outset shortly. The current health pandemic has become an existential threat to businesses led by women in Nepal which has added to the challenge in the overall economic recovery process of the country.

The COVID-19 pandemic and the consequent lockdown led the businesses to halt their operations. Some redirected their business strategies to sustain in the current situation while some went into complete shut down due to lack of enough working capital. SMEs are having a difficult time to survive in the market due to their stocks being already sold out and the uncertainty about when the new orders will arrive due to border closure and flight restrictions. These types of businesses generate cash flows and survive by monthly sale of goods hence, when they are without any supplies due to supply-chain disruptions, it is impossible for them to run their production which eventually leads them to shut their operations. These businesses tend to have fewer assets and limited cash reserves compared to large businesses which increases their vulnerability the most during the crises.

All spheres of business sector have been affected by the ongoing health pandemic but amongst all service and hospitality industry has been hit the hardest, which is largely dominated by women as an employer or employee. The unprecedented pandemic can go up to the next year and its after-effects can remain for another year or so, because of which the economic sector has become precarious. Especially the service and hospitality sector has been skidded into recession and it might take a very long time for this sector to come out of this agonizing situation.

Looking at the uncertainty regarding the current health pandemic and considering the nature of the virus, many businesses have moved towards digitalization. Grocery shops are doing virtual business, garment businesses are selling their goods online through social medias, pharmacies are selling their medicines online, restaurants have started taking online orders and delivery of food and even some spa/hairdressers have started providing home services. People have realized the importance of digital economy and making full utilization of it during such time of a crisis when there is no alternative option available. The digital tools have become so responsive to us in today's time than ever before and it has become very evident part of everyone's life. But although digitalization radically makes tasks easier and get things done efficiently, at the end of the day technology only complements the human capabilities, not replace them completely. For this reason, there are certain businesses which cannot go into full automation and digitalization such as tourism, animal husbandry, transportation etc. where the ultimate focus and service receivers are none other than the humans. Human experience, values and judgements are not replaced by artificial means.

Due to the spread of the virus, lockdown and flight restrictions, incoming of the international tourists is completely halted and the domestic tourists are not travelling too. This has led the tourism sector to stop their operation completely for uncertain time period and unfortunately, they would need sufficient gestation period to shift or redirect towards other strategies like some businesses have been doing. Further, inability to pay salary to the existing staffs is already a problem for the SME businesses whose fiscal base was weak even before the start of lengthy lockdown. Nepal government's announcement to clear the taxes amidst the lockdown gave added pain to the already suffering businesses, particularly the women-owned businesses.

Government had not long-ago announced relief packages for businesses which have been hit majorly by the pandemic. The budget for the Fiscal Year 2020/2021 was announced in which special provision for tax exemption was made for the Micro and Small Enterprises. As per the Industrial Enterprise Act, businesses with the fixed assets up to 100 million are considered Micro, Cottage and Small Industries. The tax exemption was made expecting a quick recovery of the businesses from the pandemic. The government's step has been praised and welcomed by many micro and small-scale enterprises. Despite of this, there is still some scepticism as to whether the policy will turn into reality or not, considering the government has failed to execute the tax exemption, as the policy itself has not transuded to implementing agencies, as of now.

Way forward

Gender-responsive trade and government policies are the need of today,

  • Increased women's participation in the decision-making bodies as women can be the most effective agents of change in COVID-19 mitigation through initiating women-friendly policies and implementation of support programs in regard to starting innovative SMEs and recovery of SMEs which have been paralysed.
  • Government grants and cash incentives should have special focus on women-led businesses, both for new start-ups and SMEs which have fallen aback.
  • More women's participation needs to be promoted in the post-COVID situationin SME sector through cash grants and tax incentives to start a business or the recovery of locked-down businesses, which are in the dire need of it in order to recover from the crisis.
  • The government should specifically insure and encourage Marketing Efforts (MEs) like OTOP in Thailand, to facilitate women-led businesses through establishment of public-private marketing chains and schemes for procurement and sales of their products.
  • Women specific needs and perspectives should be incorporated when designing relief measures for the micro and small enterprises where women share the largest ownership.
  • Government needs to introduce various projects which offer economic stimulus package with subsidised loans and incentives to the returnee women migrants to set up women-owned and operated small businesses.
  • The government should set a percentile-benchmark to banks and finance companies' loan portfolio, so that they offer women-targeted loans out of their total loan portfolio, which could be reviewed every year as per demands.
  • Gender-disaggregated data of the business sector needs to be updated so that differential effects of the pandemic on women and men can be accessed.
  • Gender mainstreaming should be of a major focus of the government in the emergency response measures.
  • With the surging demand of digitalization, gender-inclusive digital services should be provided to women not only in the urban areas but also in the rural parts of the country.
  • Special provision of facilitating women entrepreneurs to access Information and Communication Technology (ICT) should be provided by the government. In order to bolster the effect of this, various means of public-private partnership can be undertaken.
  • Government should take the lesson learnt from the current situation and have the mechanisms to release funds quickly to respond to the emergencies like COVID-19 in the future as well. For this, pre-planned emergency fund should be made available at all times.
  • Easy access to credit and emergency insurance services needs to be provided to reinitiate the operation of the ailing businesses.
  • Post COVID-19 pandemic, sanitation related business is expected to have the highest scope thus any sanitary-related work needs to be provided through specialised services, where women would be the most effective catalyst.

Women entrepreneurs are pivotal for resilient and sustainable economic recovery of the country, because their ultimate goal is not just to gain personal well-being or compete with peers, rather they are naturally obsessed to uplift their family and community as a whole. Besides, majority of women in Nepal pursue business to support family and raise their children because of lack of other livelihood opportunities and employability available to them. Hence, it's crucially important to support women-led businesses which will catalytically promote gender inclusivity at all levels of the society, not only help to come out of the pandemic but also from the poverty-trap. Hence, post-COVID would be a high time that the government lead and forge collaborative efforts with women entrepreneurs and businesses, transforming their work forces, operations, markets, industries, and no less important- their income generation and reducing gender inequality.

The author holds a Master of Science degree in Gender and Development Studies from the Asian Institute of Technology (AIT), Thailand.

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