Based on the WHO’s report, the Covid-19 crisis established in China in December 2019 and soon after became a global difficult pandemic. As of September 24, 2020, 213 countries and territories around the world were affecting, a total of 32,298,738 people infected, 984,974 deaths, and 23,820,147 patients recovered. From these 7,493,617 are active cases or currently infected patients (Worldometers, 2020).
Crises can be highly damaging for business as they erode trust, destroy company value, threaten business goals, exert pressure on management by providing limited time for management to respond, and may even lead to business failure (Hermann, 1963; Penrose, 2000; Lerbinger, 2012). Existing literature suggests that small rms may be more vulnerable to crisis events due to lower levels of preparedness, resource constraints, relatively weak market positions, and higher dependence on government and local agencies (Runyan, 2006; Herbane, 2013; Hong & Jeong, 2006). SMEs usually suffer from nancial loss, reduced sales volume, incapability of meeting contract terms, cash ow diculty, reduction in staff number, and even close down of the business during or after crises events. Crises events may also bring emotional and psychological stress to victims and the managers of SMEs (Leung et al., 2005; Doern, 2016; Ferris et al., 2007).
During challenging times, new startup firms have a high chance of surviving during crisis periods than during the growth period, likely due to the lack of job opportunities. Entrepreneurship activities could offset the negative impacts of crises by maintaining the flow of goods and services and restoring public condense of other business owners and the community at large and entrepreneurs pursued new opportunities and established new directions for their firms during crises (Herbane, 2010).
Post-crisis organizational learning capability is also critical to recovery. SMEs with strong dynamic and innovative capabilities and are willing to learn from crises events recover quickly (Boin, 2008, Saunders et al., 2014). Similar findings were obtained by Bullough & Renko (2018), who stated that entrepreneurs should engage in business development training and seek networking events or special lectures to learn by modeling others who have survived through challenging times.
Ethiopia can be considered as a high-risk country based on the societal structure and socioeconomic basis. There are strong social ties and attachents with frequent physical interactions that have been developed for centuries as a beneficial means of integrity, which are now considered to be risk factors for COVID-19 transmission. In urban cities such as Addis Ababa, institutions that provide public services are inadequate, such that crowding is common in hotels, cafes, restaurants, public transportation, market places, hospitals, and other social institutions. These may find it difficult to maintain physical/social distancing as means of infection prevention strategy, thus may facilitate swift spread of coronavirus disease and run business activities.
5.1 Covid-19 in Ethiopia
Based on the above two figures, Covid-19 is spreading in a fast way on the country starting from April up to present. This pandemic’s spread has creating a great challenge on different small businesses performance and peoples day to day activities, this will affect the country’s economy as well as individual life of the society.
As indicated by different researchers MSMEs are viewed as seedbeds for the growth of big enterprises. The socio-economic impacts being felt across Ethiopia already are wide-ranging and serious, with the potential to become severe, depending on the combination of the pandemic’s trajectory, the effects of counter-measures and fundamental and structural factors. These impacts are summarized below.
5.2 Most Impacted Groups, Sectors and Geographic Areas by Covid-19 in Ethiopia
In the country, specially, employees working in micro, small and medium-size enterprises (MSMEs) in the urban and rural sectors including (manufacturing, construction, trading, retail, hospitality and tourism), Predominantly helpless children and adolescents like street children, workers in industrial parks who are already laid off or in danger of losing their jobs, frontline health care professionals, Children of school-going age who are from poor, food insecure households, groups with specific vulnerabilities (persons living with HIV/AIDS, persons with disabilities, older persons, the homeless), migrants, returnees/relocates and returning migrants, Developing regional states (DRS), MSMEs in supply chains in construction, manufacturing, agro-industry, hospitality, tourism, and retail, MSMEs in supply chains for agricultural and horticultural exports as well as production + marketing of critical food crops and soon.
5.3 Key issues and covid-19 impacts
(United Nations Economic Commission for Africa) (UNECA 2020):
30%+ of Ethiopia’s MSMEs could be in jeopardy, mostly in urban areas and those embedded in small-scale manufacturing, export, construction and service industry supply chains.
A 10-15% loss of employment/livelihoods leading to a cumulative loss of perhaps 1.6 - 2.4 million jobs/livelihoods depending on the severity and duration of the crisis, mostly in urban areas. In the worst-case, 3.2 -4 million could lose their jobs/livelihoods. Knock-on effects on small businesses/enterprises and self- as well as wage employment in both the formal and informal sectors, especially in the services sector, affecting larger urban centers most sharply, with business closures and rising unemployment or loss of livelihoods and loss of productivity in the case of widespread illness in the workforce.
5.4. Sectorial / Sub Sectorial Impacts
Production might drop by 30% if producers revert to the extensive production system for cash crops. Significant income losses in specific sectors e.g. livestock, horticulture and supply chain disruptions are an increasing possibility. Start-up of agro-industrial parks will be delayed and broader negative impacts on food availability, access and utilization.
Under severe pressure, likely to be one of the most impacted sectors.
Total shutdown or sharp drop in production capacity and reduced employment in industrial parks, sub-sectors such as textiles and garment (T&G) and leather and leather products will be hit hard, the flower industry faces catastrophic losses and agro-food processing but beverages sub-sector will be relatively less impacted.
5.4.4. Services (tourism, hospitality, aviation, trading, retail):
High likelihood of closure of businesses and large-scale loss of jobs/livelihoods, in both the formal and informal sectors, especially in urban areas, women, who are disproportionately represented in the informal sector, will be impacted seriously and significant and prolonged forex losses from tourism are very likely.
- The COVID-19 pandemic has resulted in school closures across the world. It is estimated that learning for 89% of the world’s student population has been disrupted. In Ethiopia, schools have been closed since 16 March 2020 and this is likely to remain the case until the end of the academic calendar. This means that over 26 million children are currently not in school of which approximately 77% are primary school pupils. These children are neither learning nor benefitting from other school-based support mechanisms such as protection, health, and school feeding. In short, children’s well-being is at risk. Key education indices which were already dismal before the COVID-19 pandemic, are at risk of worsening in the current crisis