Exploring the Strategies Adopted by Small and Medium Enterprises to Survive the Corona Virus Pandemic in the Sunyani Municipality
CHAPTER ONE
OBJECTIVES OF STUDY
The main objective of the study will be to explore the strategies adopted by SMEs to survive the shocks of the coronavirus pandemic in the Sunyani Municipality.
To accomplish the main objective, these specific objectives must be achieved:
- To identify the impact of the corona virus pandemic on SMEs in the Sunyani municipality.
- To examine the performances of SMEs in the Sunyani municipality before and during the corona virus pandemic.
- To assess the strategies SMEs are using to survive current pandemic.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter reviews the impacts of Covid-19 on small and medium scale enterprises with specific interest on small scale enterprises in the Sunyani Municipality in the Bono Region of Ghana. This enabled the researchers to produce a good research.
Definition of Crisis and its Phenomenon
A crisis is referred as a phenomenon that entails a high level of uncertainty. It does not happen very often but when it does, it can affect society on a massive scale. Coronavirus originated from China and has been considered as a health pandemic. The virus is spread by a droplets passed between individuals based on close contact. With every crisis, a sense of urgency to respond comes at an equal pace (He et al., 2020). The nature of this virus has led to a lockdown of daily life activities and businesses with the result being a major change in life perspective (Shankar, 2020). Small businesses are vulnerable to volatile conditions (Arend, 2013). The COVID-19 pandemic has been a huge shift in the management and survival of small businesses (Budhwar and Cumming, 2020).
The coronavirus (COVID-19) is having a tremendous impact on global trade and the businesses that drive it. With countries in various stages of lockdown or loosening confinement periods, it is becoming clear that the pandemic has particularly impacted on small and medium enterprises (SMEs). Based on the available information, it shows that during this pandemic, most of these
enterprises found it difficulties to operate, especially with small and medium enterprises where
these problems are more serious as a result of the considerable decline in the demand for goods
and services. This required SMEs to embark on internet-based platforms services as alternative means of sustaining their business during these critical periods. On this note, tax breaks should be given to all SMEs by the government at all level to sustain the growth of small and medium enterprises.
History of Covid-19
Coronavirus disease 2019 (COVID 19) is defined as illness caused by a novel coronavirus called severe acute respiratory syndrome coronavirus 2 (SARS-COV-2 formerly called 2019-ncov), which was first identified in an outbreak respiratory illness caused in Wuhan city, Hubei Province, China. It was initially reported to the world health organization (WHO) on December 31 2019. Coronavirus are a large family of zoonotic viruses that cause illness ranging from common cold to severe respiratory diseases. Zoonotic means the viruses are able to be transmitted from animals to humans. The novel coronavirus disease (COVID 19) was first identified in Wuhan which spread rapidly to almost every region of the world (Aifuwa Saidu and Aifuwa 2020). Being a novel virus, it poses a public health risk because there is no drug or vaccine to eradicate the spread (Addi, Benskisim, Amina Cherkaoui, 2020). The symptoms of the virus on infected individuals include: fever, cough, muscle pains, headache, sore throat, and loss of taste and smell (worldometers 2020). The coronavirus disease is causing loss of life and severe human suffering globally.
On January 30th 2020, the WHO declared the COVID 19 outbreak a global health emergency (world health organization 2020). On March 11th 2020, the WHO declared COVID 19 a global pandemic. Evidence shows that COVID 19 virus can be airborne and transmitted by aerosols (world health organization 2020a) which makes vast and crowed urban areas susceptible to the spread.
Background of Covid-19 Situation in Ghana as at 2020
Ghana recorded the first confirmed coronavirus case on March 12, 2020. Beginning March 16, the Ghana government implanted sweeping social distancing initiatives and travel restrictions to prevent an outbreak, for instance: a. Suspension of all public meetings exceeding 25 people for one month; b. Closure of all universities and schools until further notice; and c. Mandatory 14-day self-quarantine for any Ghanaian resident who has been to a nation with at least 200 confirmed cases of Covid-19, with the last 14 days. However, the measures implanted by the government on the earlier stage did not effectively as the virus continue to spread among people. On March 23, the country closed all its borders to travelers, and March 30, 2020, there was a partial lockdown of major urban areas such as Accra and Kumasi was implemented. As of October 7, 2020. From the first registered confirmed Coronavirus case in March, the country has recorded 30,366 cases, with 26,687 recoveries and 153 deaths as of July 20, 2020, and the death rate of 0.50% was among the lowest in the world. Ghana has confirmed 46,829 Covid-19 cases with 46,060 recoveries/discharge and 303death. There are 466 active cases. The gender distribution of the confirmed cases is 58% of male and 42% of female.
CHAPTER THREE
METHODOLOGY
Introduction
This chapter talks about the approach used for the research study, the sample population and how sample size was determined, sampling technique; tools used for data collection, data analysis as well as data sources. The section also described the study area, this section finally described how field data was made suitable for presentation and analysis and the tools used for data presentation.
Study Population
The population of the study consists of all participants in the SMEs industry. The study population comprises entrepreneurs and an officer from National Board for Small Scale Industries (NBSSI). The target population includes people who provide SMEs services. This included, the hospitality sector, the trading sector, the banking sector, the manufacturing sector, construction sectors and others in the Sunyani Municipality. This was to ensure that information taken from the field would be accurate and reliable.
STUDY AREA
Profile of the Sunyani Municipality
Sunyani municipality is one of the twelve districts in the Bono region. The municipality was established on 10th March, 1989 by a legislative instrument (LI) 1473.This was the period Ghana adopted the District Assembly concept. The overall goal is to accelerate growth and development in the Municipality. The Sunyani Municipality can be located between 7°20′ N, 2°20’W, and 7°33’N 2°33’W at an altitude of between 229 to 376 m. It has a total land area of 2,488 km2 with a population of 123,224 (GSS, 2012) and is mainly urban with more than 8 out of every 10 persons living in urban areas. The Municipality exhibits features of an urban, peri-urban and rural area.
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSIONS
Introduction
This chapter was used to analyze the data collected from the field. The data was collected within the objectives of the study. It contains descriptive information of questions in the questionnaires given to the SMEs as well as that of relevant institutions supporting Small and medium enterprises within Sunyani Municipality. It also captured information from banks and other microfinance institutions.
BACKGROUND OF RESPONDENTS
Respondents Gender
A total of 250 questionnaires were distributed and out of this, 240 were received from the field and the analyses are made from the responses received. Out of the 240 entrepreneurs 61.7% were male and 38.3% represent female. This clearly shows that in Sunyani, most of SMEs activities are carried out by a lot of men. This is in line with the 2010 housing and population census which indicate that 51% of the population are female and 49% were male. The table below explains gender of entrepreneur respondents.
Age distribution of Owners of SMEs
From the study, out of the 240 questionnaires, 100 of them which represents 41.7%% falls within the ages of 21-29 years which shows that youth have seriously involved themselves with the SMEs activities and this can serve as a bright future for the sectors if all the necessary support are given to the sector and can reduce the rate of the youth unemployment since a lot of them are now involving themselves in SME activities. This attest with a survey conducted about small scale enterprises in Ghana which revealed that young people owned almost 32.9% of the enterprises. 79 of them between the ages of 30-39 constitute 30 percent, those aged between 40-49 years owned 16.3%. 39 of the entrepreneurs which also represent 8.3% falls within the age brackets of 50-99, whiles the remaining 6 falls within 50-60 years and this also form 0.8%. The study revealed that young people owned most of the enterprises in the country, from this it is believed that small and medium enterprise has a good future and will help to reduce unemployment among the youth in the near future.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
Introduction
This chapter discusses the summary of the findings, implications, recommendations and conclusions discovered in the course of the research. The findings were the highlight of issues that were revealed during research. It also involves the recommendations that can help small and medium enterprises to survive subsequent pandemics.
SUMMARY OF FINDINGS
Key issues discovered and their respective implication during the analysis include; male and youth domination, low level of educational qualification, the age of business, the type of business ownership, level of sales, supply chain activities, online marketing and access to government support.
Male and Youth Domination
The study revealed that, 61.7% of SMEs entrepreneurs are male. It also revealed that, majority of the entrepreneurs are between the ages of 21-39 years old. This group formed 74.6% which is quite significant proportion. This implies that SME entrepreneurs are energetic and therefore with adequate financial and skill training support, the sector could improve its contribution towards the GDP as well as the economic development of the country.
Low level of educational qualification
The findings revealed that level of education has a positive impact on the growth of businesses. Entrepreneurs with high level of education can keep basic records and prepare business plan to access credit from the bank.
Age of Business
The study revealed that, most of the small and medium enterprises were between the ages of 1-3 years old. This implies that, most of these businesses are very young and still striving to survive. The majority of the businesses within this range were the ones severely hit by the pandemic due to their lack of financial and management establishment.
Type of Business Ownership
Out of the 240 businesses, it revealed that, a majority of them were sole proprietorships which constituted 70.4% of the population. This was as a result of the ease in the setting up of sole proprietorship businesses and the less financial capital requirement needed to start. They are also easy when it comes to managing these businesses.
Level of Sales
From the study, 88 of SMEs showed an average level of sales which represented 36.7% of the total population during the coronavirus pandemic. This implies that, the pandemic brought with it hardships and economic recession all over the world and this was not a period for businesses to increase sales since there were little or no financial capacity of customers.
Supply Chain Activities
The study showed that most SMEs had bad experiences in their supply chain activities. 32.1% of SMEs in the Sunyani municipality recorded bad performance in their supply chain activities, as a result of a slow demand of various products and services in the Sunyani municipality. The disruption in the supply chain activities also occurred because of the lockdown that occurred in the major cities, that is, Accra and Kumasi since they were the cities responsible for the distribution of major finished and unfinished goods in Ghana.
Online marketing
The study revealed that, 54.6% of SMEs were not using online marketing. They complained of how expensive it will be for their businesses and due to how prices of raw materials and services were increasing, it was not prudent engaging in something that result was uncertain. For some SMEs considering the cost involved in running ads on a website and buying internet for social media advertisement it was expensive in doing so. Also some SMEs operated on a much smaller scale and did not see the need to use online marketing since most of their customer were staying close to them.
Access to Government Support
From the study, most small and medium enterprises were not able to access the government support, this constituted 92.5% of the study population. This was because it was difficult filing for and obtaining the government support. Also, some SMEs found the interest rates placed on loans very challenging as their businesses did not have the capacity to pay back the loans at the stipulated time frame.
CONCLUSION
On the whole, the study concludes among other things that SMEs in Sunyani are dominated by males and the youth of which majority of the businesses are between the ages of 1-3 years old. Most business owners are less or non-educated which has led to many of them not keeping business records in other to access their growth performance. The study also revealed that, most SMEs have registered their businesses but not with the Registered General Department. It was also revealed that, most SMEs could not perform well during the covid-19 pandemic.
Looking at their sales level, most SMEs recorded an average performance due to; the loss of business customers, the inability of businesses to retain their old customers and also attracting new customers. Again, the rate of the businesses performance was also recorded to be average because there was a low supply of raw materials, a disruption in the supply chain activities and also the lack of availability of funds for operation during the covid-19 pandemic. The organizational goals of most of the businesses were also affected badly due to the inability of the human capital to adapt to change.
Finally, small and medium enterprises also adopted diverse strategies in order to survive the pandemic. Some businesses used digital, electronic, mobile banking as a way of surviving the pandemic. Other entrepreneurs also believed that, adopting an online marketing into the business will help them to attract new customers into their business and this was a strategy they adopted to survive. Working from home was also one of the strategies that SMEs adopted so as to continue operation. This strategy helped them meet the needs of the customers remotely. Some businesses also had to downsize the number of their employees so that they can save enough money to invest into the business. Also, some of the SMEs also had to reduce the salaries of their employees, run shifts or rotation and also reduce the operational activities of the business so as to reduce the number of contact points with both staff and customers in a way to observe the protocols set out by the government authorities. The availability of government support also provided funds for few of the businesses to operate well.
RECOMMENDATION
Based on the analysis and findings of the research, the researchers wish to make the following recommendations that Small and Medium Enterprises can use as measures to survive subsequent pandemics.
- 4.1 Proper Management System: pandemics are unforeseen circumstances and therefore one cannot plan properly for them but with proper management systems in place, an organization will be able to survive pandemics to some extent. This will assist businesses in the optimum utilization of the business resources in terms of both human, physical and financial resources. Proper management will also develop analytical and conceptual managers to arrive at solutions that are geared towards the organizational goals. Businesses that have proper management systems are able to face any competitions that may come their way. They are also able to capture bigger market shares in the business environment.
- 4.2 Dissemination of information across all sectors of the economy to create awareness: here, the government can help SMEs by properly disseminating adequate information on the said pandemic of crisis to them so as to create awareness on it and how to put resources together in order to survive. This can be done through different means so as to reach everyone. It will help improve their knowledge base on what is going on to make better judgement in future situation.
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