As COVID-19 pandemic continues to affect global and local value chains across the world, many countries have taken commendable proactive measures to ensure they contain the socio-economic effects that have come with the pandemic. While many have deployed protective measures in cities going as far as total shutdowns and lock-downs, there have been considerable initiatives deployed by governments to provide for their people through rapid relief and stimulus programs that can mitigate national and regional economic impact.
Tanzania like many other developing countries has the majority of its workforce working in the informal economy. The workers in this sector are the first to be hit by COVID-19 socio –economic impact as they do not have the privileges that come with formal employment, and the running of their businesses and work is already dominated by uncertainty even before COVID-19. Many of the workers affected are young people and women who survive on minimum wage and very low income.
Additionally, there have been reports of even those in formal employment in some sectors who have suffered from job losses due to the mere fact that the sector they work in is collapsing during this pandemic. Workers and owners of businesses in the travel and tourism sector have had to suspend without pay or totally close down operations due to the travel ban the country has put in place. The education sector is also suffering tremendous effects as educators struggle to transition to digital platforms to provide remote learning and innovative approaches to reach the most vulnerable children. Staff retention has become a huge challenge as parents have stopped paying the school fees as their children are now home educated and consequently the income for the schools has fallen drastically which has in turn impacted on the teachers’ wages.
The Launchpad Tanzania and Maarifa Hub (Tanzania) as stakeholders working at the intersection of sustainable development and decent work and economic growth, took the initiative of running a survey on COVID-19 economic impact on small and medium businesses as well as entrepreneurs in Tanzania to determine the severity of the impact.
Although Tanzania has seen a low rise/ in number of infected and affected persons with the virus, the socio-economic impact has been evident due to the effects on the global value chains. The survey was shared in social media platforms and received 201 responses from entrepreneurs, start-ups and SMEs across Tanzania (17 regions). Dar-es-Salaam city, home to more than 6 Million Tanzanians and the biggest engine and driver of economic growth, is the base of operations for many of the respondents of the survey and because of the inter-dependency of sectors, the spill over effects from one to the other have also been quite severe.
The survey questions took a broad but comprehensive approach to determine the nature of the business, entity, business operating period, revenue, number of people in employment, to what extent have they been economically affected by COVID-19, as well as what measure they think should be taken by respective and relevant stakeholders and authorities to address these challenges.
Herewith a Summary of the responses;
- 2/3 of those who responded to the survey were male. Which also suggests the magnitude of the gender digital divide amongst SMEs & Entrepreneurs
- 25% of the surveyed youth were involved in Agriculture and Agribusiness which is stipulated to be due to global value chains as domestic markets and supply chains can play a vital role in ensuring food security during and post COVID-19.
- 1/3 of those surveyed have been in business for each of the following categories: less than a year/ 2 to 3 years/ more than 5 years which suggest a period of economic transformation in the past 5 years that could have contributed to the national economic growth
- 40% have gross monthly sales (revenue) of more than 1,000,000 TZS and 20% are around 200,000 TZS
- 1/3 of those surveyed employed between 3 and 6 people and 60% at least 2 people (widens impact in terms of number of families affected if no income); 10% had more than 10 employees.
- 97% of those surveyed have been economically impacted by the COVID-19 pandemic
- 40% of those surveyed have experienced a loss of half of their income and 10% have experienced total loss of income.
- There is an overwhelming view that tax relief or tax freeze from the government will alleviate the pressure and enable slow recovery.
Some of the other popular suggestions in terms of easing the impact include:
- Freezing premises rent for a fixed period
- Reduced data tariffs/charges to enable shift to online trading
- Tax relief on utility bills (water, electricity, gas)
- Extension of payment period for small loans,
- Community awareness (Education) on COVID-19 prevention
- Regulated prices on protective gear to enable affordability and protection of workforce
- Digital skills training and crucial skills that are pertinent to coping mechanism for small businesses (critical thinking/problem solving/decision making).
See below for visuals from the findings
We join other stakeholders in insisting on collective efforts by the ecosystems in affected sectors to push for recovery and response interventions that will be specific, inclusive, holistic and dynamic including policies and immediate response measures i.e tax exemption, cash transfers for the most affected, stimulus packages for the affected sectors, awareness and education on the pandemic to reduce and control spread. Domestic violence has also been reported to be on the rise in households as more people stay at home either due to job losses, business shutdown, many taking out their frustrations on their partners. We call on the entire community to be each other’s keeper and to take action against such incidents.
The Launchpad Tanzania and Maarifa hub are currently supporting local enterprises in Dar-es-Salaam to design innovative business models as well as transition to the urgent emerging digital trends. We are also supporting startups and entrepreneurs in the ideation process for solutions and ideas to respond to both protective and essential needs of communities during and post COVID-19. We have launched capacity building programs for youth and women to re-skill and up-skill as per the demands in the current market where the workforce is now more than ever required to posses 21st century skills and digital skills to stay relevant and remain competent, efficient and productive in both employment and entrepreneurship fields.