TechnoServe COVID-19 Impact Report:

Rebuilding Global Livelihoods

Small Business

Small and medium-sized enterprises (SMEs) and microretail businesses form the backbone of local economies around the world. In Latin America and the Caribbean, 74% of all jobs are at firms with fewer than 50 workers, and that share rises to more than 90% in India and Sub-Saharan Africa. These businesses are also vital for providing products and services: in Nairobi, Kenya, for example, 80% of all consumer golds are sold through informal micro-retail outlets called dukas.

But the impact of the coronavirus pandemic has created new challenges for these essential enterprises, changing the way they do business. Social distancing and restrictions meant to halt the spread of the virus have made it more difficult to reach customers, access supplies, and conduct other business operations. And entrepreneurs are experiencing greater need for financing, just when commercial lending has slowed.

While the end of some curfews and lockdowns eased challenges for business owners during the second half of 2020, entrepreneurs are still facing ever-shifting restrictions and the economic consequences of the crisis. And after taking significant financial hits in 2020, the long-term resilience of many small enterprises is at risk.

As these small business owners look ahead to 2021 and beyond, they will need continued support to identify market opportunities, adapt their business models, and manage their finances with an eye towards business survival and recovery.

COVID-19's Impact on Small Business Owner Livelihoods

The graphs below chart the financial experience of women and men entrepreneurs in TechnoServe's programs, through six months of the pandemic in 2020.

[Surveys of participants in TechnoServe’s entrepreneurship programs in Benin, Botswana, Chile, Cote d’Ivoire, El Salvador, Guatemala, Honduras, Kenya, Mexico, Mozambique, Nigeria, South Africa, Tanzania. Average sample size 738.]
Financial Impact
% of respondents who reported that their business’s sales had declined over the past month
Financial Concern
% of respondents who expected their sales to decrease in the next 3 months
Microretail: % of respondents who reported their household could not raise 5% of gross national income per capita in emergency funding within next month / Other Businesses: % whose sales had stopped


Market Challenges

As countries around the globe enacted restrictions to stop the spread of the virus, many businesses had to make changes that significantly affected their sales: restricting business hours; limiting the number of customers they could serve; or even temporarily closing their doors. Consumers also altered their behavior, reducing the number and length of their shopping trips and shifting their buying preferences. In May 2020, TechnoServe found that 57% of micro-retailers surveyed in Africa reported sales as their greatest challenge.

In a global survey a few months later, nearly two-thirds of small businesses reported COVID-related problems with customer demand. As the year progressed and social and travel restrictions eased and re-tightened in different countries, sales challenges largely decreased.

But at the close of 2020, nearly 30% of entrepreneurs still struggled with sales, and some sectors—especially those related to tourism and hospitality—face particularly acute challenges.

The first year of the coronavirus pandemic battered small businesses around the globe, and the ones still standing have learned to adapt—usually in leaner, less profitable form. But without sufficient sales, businesses will struggle to pay salaries and rent and may eventually risk shutting down entirely.

Small Businesses Reporting Reduced Customer Demand
% experiencing reduced demand over the past month, 2020

Market Solutions

For small enterprise owners suddenly flung into the middle of a volatile economic crisis, personalized business advice was a lifeline. With immediate coaching on how to adapt their business model and financial strategies, many entrepreneurs could pivot their business towards survival.

TechnoServe’s entrepreneurship programs employed a “crisis toolkit” developed from previous work supporting small businesses through acute economic problems. This eight-step approach helped entrepreneurs take stock of the situation, conduct a business model assessment to identify new opportunities, and prioritize key actions needed to weather the crisis. Drawing on these tools, many entrepreneurs identified new distribution channels, shifted marketing and sales online, and added new products and service offerings to meet new opportunities.

In Peru, for example, small- and medium-sized businesses in one TechnoServe program had increased their sales by 81% and improved their employment levels by nearly 50%—just two months after they began following the crisis toolkit.

In the absence of a predictable business environment, time-tested guidance on how to maintain a viable level of sales often meant the difference between an enterprise surviving and succumbing to the COVID-19 crisis.

Below are examples of small business market solutions that proved effective this year:

Pivoting to New Market Opportunities


Coronavirus restrictions and customer fears severely impacted micro-enterprises in vulnerable communities around Maputo, Mozambique. With curfews, capacity limits, and other safety restrictions in place, it was difficult for enterprises like bars, hair salons, restaurants, and neighborhood grocery stores to serve customers, forcing many of these businesses to close. With limited cash reserves and access to finance, micro-enterprises are particularly vulnerable to financial shocks like temporary closures and sales declines.

TechnoServe responded quickly, targeting training to help businesses adapt and innovate in order to maintain their sales. Using written training materials and phone calls, WhatsApp messages, and videos, the team helped entrepreneurs identify new product and service offerings and ways of doing business. Hair salons started selling hair-care products for home use; bars started offering groceries; restaurants started taking pre-orders for meals to carry away; and tailors started producing masks using traditional print fabric. Grocery stores and service providers started taking orders through WhatsApp offering home delivery.

In early April, a survey found that 46% of participating businesses had ceased operations or planned to do so but. But after a month of support from the program, that percentage had fallen to 11%.

Partner: ExxonMobil Foundation

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A Crisis Approach for the Tourism Sector


While the economic impact of COVID-19 has been widespread, some sectors have been particularly hard hit. The United Nations World Tourism Organization has proclaimed 2020 the worst year in travel history, with international arrivals down 74% from the previous year. In Botswana, where tourism contributes more than 13% of GDP and employs about one in 10 workers, the nearly complete halt to international tourism threatens tens of thousands of jobs.

Supporting the small businesses in this sector has required a multi-pronged approach using the TechnoServe crisis toolkit. TechnoServe business advisors first checked in with the impacted entrepreneurs and provided them with encouragement to keep going despite the discouraging economic shock. They then helped entrepreneurs carry out a business model canvas, identifying key challenges and opportunities and prioritizing activities for survival.

For example, one business offering accommodation services introduced “market days” to allow other small businesses to display and sell their products within the premises for a small fee. In another case, a travel agency started to manufacture ice blocks to sell to other businesses. To date, all 74 of the tourism businesses enrolled in the program have been able to keep their doors open, even as the industry halted operations.

Partner: Anglo American

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Supply Challenges

Just as the coronavirus disrupted businesses’ access to their customers, it also disrupted their access to supplies. Slowdowns in border inspections and international shipping made it difficult for businesses to receive imported materials, while local supplies were delayed by travel restrictions and other transportation complications. At the same time, businesses faced rising prices for many goods as transportation and production costs rose and most emerging-market currencies weakened against the US dollar.

More than half of entrepreneurs reported COVID-related supply disruptions in July, a share that fell consistently over time as restrictions eased and entrepreneurs adapted. Micro-retail shops, which mainly sell food and other consumer goods to local customers, seemed to recover more quickly from the initial supply disruptions. This is due to factors such as many governments’ prioritization of support for food distribution activities and micro-retailers’ generally lower reliance on imported supplies.

Still, 15% of all entrepreneurs surveyed were still having COVID-related supply challenges at the end of 2020, affecting their ability to maintain inventory and sales at a level that could help recover business losses from earlier in the year.

Small Businesses Reporting Pandemic-Related Supply Challenges
% reporting challenges over the past month, 2020

Supply Solutions

Identifying suppliers and service providers is an essential skill for entrepreneurs and is included in TechnoServe’s business training programs. With the disruptions caused by the pandemic, however, some programs had to incorporate additional activities to facilitate new linkages between suppliers and businesses owners.

Digital solutions became especially useful in light of social distancing and travel restrictions. Rather than introducing new systems, TechnoServe often helped entrepreneurs apply technology they already used and understood to new ways of doing business. In Kenya, for instance, TechnoServe worked with entrepreneurs to use WhatsApp groups and other digital platforms to connect with new suppliers and exchange information about good deals on products for their shops. These digital connections helped enterprise owners continue operations in the face of rapidly changing business conditions.

As one shopkeeper in Kenya reported:

“My trainer has connected the shop owners in my region with different suppliers and manufacturers, making it easier for us to get the products we weren’t getting from our usual suppliers.”

– Caroline Moses, shop owner (Nairobi, Kenya)


Finance Challenges

The coronavirus pandemic has both increased small businesses’ need for capital and decreased the amount of commercial financing available to them. Shutdowns and slowdowns in sales reduced the capital available for entrepreneurs to pay salaries, rent, and other fixed costs. At the same time, the uncertainty around the economy and the risk of business failure have made banks and micro-finance institutions less willing to lend money to these enterprises.

In July, 38% of entrepreneurs surveyed by TechnoServe reported difficulties with access to finance. As businesses adjusted their models and sales recovered, that percentage fell to 17% by January 2021. But this means that nearly one entrepreneur in five still had unmet needs for financing almost a year after the crisis began.

In the absence of commercial lending, entrepreneurs have turned to various strategies to keep their businesses afloat. Many have halted investments or cut expenses, with potential long-term negative impacts for business growth. In other cases, entrepreneurs—and particularly micro-retailers—have turned to informal lenders to access working capital. These informal loans tend to come with very high interest rates and none of the protections associated with formal bank transactions.

Small Businesses Reporting COVID-Related Access to Finance Challenges
% reporting challenges over the past month, 2020

Finance Solutions

TechnoServe’s entrepreneurship programs have taken a two-pronged approach to addressing the access to finance challenges caused by the crisis. First, as part of the crisis toolkit, business advisors are helping entrepreneurs evaluate their costs and identify ways to save money without jeopardizing recovery and growth in the future. Once firms understand their break-even point, they can make decisions that save money while ensuring business survival, such as foregoing commercial space in favor of operating out of the home.

TechnoServe is also working with a variety of stakeholders to ensure that firms can access emergency funding and put it to effective use. Governments, foundations, and the private sector have recognized the dire situation facing many small businesses and have created emergency funding vehicles. However, these relief efforts are often most effective when coupled with technical assistance that provides entrepreneurs with the skills and tools needed to weather the crisis.

Below are examples of small business finance solutions that proved effective this year:

Digitizing Access to Finance and Training


Micro-enterprises rely on consistent cash flow to pay for merchandise, salaries, rent, and other ongoing expenses. When the COVID-19 pandemic drastically cut sales, it threatened the very ability of these businesses to stay afloat.

A few months into the pandemic, TechnoServe began working with the Mastercard Foundation and 4G Capital to disburse more than $4 million in emergency repayable grants to 28,000 micro-enterprises in Nairobi and Mombasa. Many participants used the funding to restock their merchandise, enabling them to increase sales and provide more goods and services to their communities.

To augment the impact of the grants, TechnoServe is also providing remote training on key topics for business survival. The two-thirds of program participants with smartphones receive support via WhatsApp and a dedicated app developed by TechnoServe for micro-retailers. Participants using older phones get training via SMS.

So far, participants receiving training through the program have shown a repayment rate of 59% for their grants, dramatically higher than the 13% rate for similar micro-entrepreneurs receiving digitally disbursed micro-loans.

Partner: Mastercard Foundation

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Emergency Funding for Artisanal Business Survival


Artisanal cheese is an emblematic product from Minas Gerais, Brazil. In recent years, small agribusinesses in the state have made enormous strides in opening up new markets, but COVID-19 reversed many of those gains.

Retail market restrictions, transportation disruptions, and declining consumer demand within an economic downturn left dairy producers with large quantities of unsold cheese, slowly spoiling in storage facilities. A TechnoServe survey in May found that revenues had declined 54% from their pre-pandemic levels, and in the same survey, 100% of respondents said that they needed additional capital to weather the crisis.

Under the Business Recovery Fund, an Anglo American-TechnoServe collaboration, producers are receiving up to $3,900 in emergency grants. Some of the money can be used as working capital for ongoing expenses, but at least 60% must be used for essential capital expenditures designed to boost sales, increase product quality, or obtain or maintain government certification. These investments may include the purchase of improved machinery, new marketing initiatives, or the construction of expanded facilities, among other uses. To ensure that these investments are impactful and help the businesses weather the crisis, the participants are also receiving tailored technical assistance to plan and carry out their investments, as well as to tackle their ongoing business challenges.

Partner: Anglo American

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