Meshesha Zewde and Desalegn Shamemo, Economic Effects of COVID-19 on Micro and Small Enterprises in Addis Ababa Surrounding Towns of Oromia National Regional State (2022)
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“Meshesha Zewde and Desalegn Shamemo, Economic Effects of COVID-19 on Micro and Small Enterprises in Addis Ababa Surrounding Towns of Oromia National Regional State (2022).”
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Economic Effects of COVID-19 on Micro and Small Enterprises in supply and demand shock as businesses The pandemic's economic disruption is
Addis Ababa Surrounding Towns of Oromia National Regional State, reduced or stopped production, and severe on MSEs, resulting in lower demand
Meshesha Zewdie 1& Desalegn Shamebo2 consumption decreased, as seen in the United for goods and services produced by MSEs as
States, China, South Korea, Italy, France, consumers reduce current consumption
Abstract Brazil, and the rest of the world (Paolo & spending due to fear of the virus spreading
Micro and small businesses contribute a lot to Ethiopia's transition from an agrarian to an industrial economy. But, now, the
sector’s economic operations are affected by COVID-19. Accordingly, this study aimed at examining the economic effect of the Andrea, 2020; Baldwin & di Mauro, 2020). locally and internationally, as well as the side
COVID-19 on micro and small enterprises in Addis Ababa surrounding towns of Oromia National Regional State. To achieve These economic effects of the virus may effects of health measures such as staying at
this objective, quantitative data were collected from 436 MSEs by questionnaire that represents the situation of the enterprises
before and after the outbreak of the pandemic in December 2020. Data was analyzed by descriptive statistics method. The have resulted from viral-control measures home, social distancing, and declaring a state
findings of the study showed that at the beginning of March 2020, before the outbreak of the pandemic, an enterprise had, on implemented by firms, the government, and of emergency. The fall in demand for goods
average 3.8 workers whereas, after the occurrence of the pandemic, an enterprise had, on average, 2.9 workers. This implies
that due to COVID-19, enterprises decrease their workers on average by 0.83 and the mean difference of workers before and people. Businesses have closed, reduced and services will also cause a substantial
after the pandemic was statistically significant at less than 1% probability level. Furthermore, 32.3% of respondents reduced production, and lay off staff as preventative decrease in the income of the MSEs.
their workers because of the pandemic, 60.55% and 31.02% of enterprises stopped working temporarily and partially (half a
day) respectively. On the other hand, the enterprise's annual income for the year 2019 on average was 170,174.4 Birr whereas measures. Governments prohibit certain Consequently, MSEs will fail to pay salaries
it was Birr 127,433.8 for the year 2020 during the pandemic and the mean difference was 42,740.6 Birr which is statistically sorts of economic activities, such as and wages for their employees and then lay
significant at less than 1% probability level. The main challenges enterprises faced during the pandemic were a fall in demand,
decline of orders from customers, and lack of operating finance. Based on the findings of the study, training on a business restaurants, taverns, cinemas, and stores, and off workers, unemployment increased
recovery plan development and new line production, an extended debt repayment period, and provision of short-term credit are people limit their trips to the market, cross- particularly in the urban area, faced financial
suggested to make enterprises recover faster from the adverse effect of COVID-19.
Keywords: COVID-19, Micro and small enterprise, Sululta, Burayou, Ethiopia border travel, recreational activities, and constraints to pay rent for working areas, and
1
Lecturer at Ethiopian Civil Service University Department of Development Economics and Management; Email:
other social activities (Baldwin, 2020; loan to banks or microfinance if the
mesheshazewde@gmail.com Baldwin & di Mauro, 2020). Despite the pandemic continues for six (6) months and
2
Assistant Professor at Ethiopian Civil Service University Department of Development Economics and Management; Email: efforts of firms, governments, and above (Job Creation Commission,
dessalegn4@yahoo.com
individuals, the virus continues to spread 2020).Now, the pandemic has stayed for
JADS Vol 8 No. 2, Dec 2021 Issue; DOI: https://doi.org/10.56302/jads.v8i2.3262 from time to time. greater than two years and the findings of this
paper also showed MSEs reduced workers ,
The economic effect of the virus is more their income and saving were also reduced.
likely to be severe in developing countries,
as they are less able to subsidize their Different researchers made an effort to
Introduction by the Coronavirus, governments of fledgling businesses than wealthy countries. examine the economic and social effects of
many countries have been taking Various health precautions aimed at the virus. In research conducted by Bartik et
The pandemic COVID -19 was first identified different measures like social distancing, containing the virus and its transmission al. (2020) on 5800 small firms in the United
in Wuhan, China, at the end of 2019 and border lockdown, use of face masks, full vectors harm micro and small enterprise States, 43 % of respondents have already
declared as a pandemic by World Health or partial lockdown, and testing. (MSE) supply and demand. MSE fosters the temporarily shuttered their doors and cut
Organization (WHO) on 11 March 2020 However, governments of many growth of a nation's economy by creating job their workforce by 40%. Another research
(WHO, 2020). The virus has touched almost all countries faced challenges in choosing opportunities and capital accumulation and conducted in similarly, a survey on MSEs in
continents of our planet and spread to more whether to save the economy before reducing the gap in income inequality. For the Netherlands found that 85 % of MSEs are
than 216 countries and territories. The saving the people or to save the people instance, micro and small-scale enterprises in financial problems, with micro-enterprises
pandemic has caused global health and before saving the economy ahead of contributed 6.2% in the US, 22.3% in China, facing the most challenges, and a study in
economic disruption. As of April, 2022, more deciding which measure should be 80% in India, 67% in Japan, and 70% in the Belgium found that 31% of MSEs are at risk
than 510 million people were infected by the applied for the reason that "one size may European Union of employment opportunity of going out of business.
virus and 6.2 million people died all over the not fit for all". Even if, many countries (Tegegne & Meheret, 2011). In Ghana and
World (WHO, 2022). In Africa, in March 2020, chose “save the people before saving the In a survey conducted by the Society for
South Africa, MSEs represent a vast portion
where most countries reported the first case, the economy”, these countries noticed that Human Resource Management in the United
of businesses. They represent about 92% of
virus surged slowly. But, now (April 2022) it their health crisis has been shifted to an States in April 2020, 42% of small business
Ghanaian businesses and contribute about
has been proliferating and resulted in economic crisis (Ozili & Arun, 2020). owners, particularly in the service sector, had
70% to Ghana’s GDP and over 80% to
0.25million deaths and more than 11.8 million to close their businesses, with 62%
Despite the Coronavirus's devastating employment. MSEs also account for about
confirmed cases (Johns Hopkins University, experiencing a revenue decrease, 12% of
effects on human health, it is wreaking 91% of the formal business entities in South
2022). In Ethiopia, the number of confirmed small businesses unable to stay open for
havoc on the global economy. Falling oil Africa, contributing between 52% and 57%
cases surpasses 470,937 and 7510 deaths more than a month, and 32% unable to stay
prices, decreased export and import, of GDP and providing about 61% of
(Johns Hopkins University, 2022). To reduce open for more than three months.
weakened tourism and aviation sectors, employment (Peter, 2015).
the number of daily confirmed cases and deaths
increased poverty and unemployment,
Ethiopian CivilService
Ethiopian Civil Service University
University 50
50 Ethiopian Civil Service University 51
Shafi et al. (2020) aimed to determine the support teleworking in MSEs (including Partially restrictive restrictions increased the by COVID-19, and the pandemic has put a
impact of the COVID-19 outbreak on encouraging firms to adopt IT solutions and chance of low sales among businesses, strain on ordinary business operations and
MSMEs of Pakistan. They applied an develop e-commerce sales channels), and particularly in the non-agricultural sector. people movement on MSEs in these towns.
exploratory methodology. They collected MSEs facing a 15% decrease in sales can
data by an online questionnaire from 184 claim interest compensation and can borrow Ethiopian government has implemented a Consequently, we aimed to conduct this
Pakistani MSMEs. According to the with no collateral (Organization of variety of measures to restrict the virus's research to investigate the economic effect of
findings, the majority of the participating Economic Cooperation and Development, spread and mitigate its economic impact, COVID-19 on MSEs in Addis Ababa
businesses have been significantly impacted 2020). In South Korea, a survey of 407 having recognized the pandemic's severe surrounding towns of Oromia National
by the virus, and they are dealing with a MSEs performed in March 2020 revealed impact on health and the economy. The Regional State with specific objectives of
variety of challenges including financial, that the pandemic has affected 61.1% of announcement of a five-month state of estimating the effect of the COVID-19
supply chain disruption, decreased demand, MSEs, 42.1% of which will be unable to emergency, partial lockdown, the suspension pandemic on the income and employment of
decreased sales, and profit, among others. continue operating for more than three of airline flights to more than 80 countries, MSEs, identifying the challenges faced by
Furthermore, over 83% of businesses were months, and 70.1% for no more than six the provision of 15 billion Birr to private MSE during COVID -19 and assessing
unprepared or had no plan in place to deal months. A survey of 6000 MSEs in Italy banks by the National Bank of Ethiopia, and measures taken to overcome the effect of the
with such a circumstance. In addition, nearly found that 72% of enterprises were directly the imposition of 14-day quarantine are a few COVID -19 pandemic on MSEs. The results
two-thirds of participating businesses affected by the pandemic due to a drop in examples. Despite these efforts, Ethiopia's of this study could aid policymakers in
claimed that if the lockout extended longer demand and/or supply chain, with 1/3 of GDP grew by 6.1% in 2020 compared to identifying economic disruption caused by
than two months, they would be unable to respondents estimating a revenue decrease of 8.4% growth for the year 2019 before Coronavirus, develop appropriate policies
survive. more than 15% and 18% estimating a COVID-19. and strategies to help MSE recover quickly
revenue decrease of 5-15% (OECD, 2020). from the COVID-19 pandemic's economic
Kassa (2021) gathered data from 276 MSEs, like those in many other developing
crisis, and determining possible short and
respondents for a study on the determinants The Chinese government has also taken countries, play a critical role in the Ethiopian
long-term solutions for the adverse effect of
of micro and small business continuity various measures to ensure MSE economy by providing jobs, saving money,
the virus and the findings could also be used
during the COVID-19 pandemic. The sustainability, including encouraging large ensuring a fair income distribution,
as a reference source for future research due
information gathered was evaluated using enterprises to collaborate with MSEs, such as contributing to GDP growth, and so on.
to the virus's peculiar nature.
descriptive, correlation, and regression increasing their support in supply chains, in According to a report published by the
analytic methods. People and administrative terms of loan recovery, raw material supply, Federal Job Creation and Food Security Materials and Methods
factors, regulatory factors, economic factors, and project outsourcing, motivating MSEs to Agency in 2019, Ethiopia had more than
partnerships, and owner leadership have a engage in technology innovation, fostering 602,715 established MSEs between 2015/16 Study Design and Source of Data
positive relationship to micro–small MSE participation in public procurement by and 2018/19, employing over 3.04 million It has been more than a year since the first
enterprise continuous operations during the central and local governments, and the people, creating more than 5.02 million jobs, case of the COVID-19 pandemic occurred in
COVID-19 pandemic with r = 0.457, 0.558, Chinese central bank launched a CNY 500 mostly for youth and women, and saving Ethiopia, and the pandemic's spread has not
0.572, 0.519, and 0.654, respectively. With a billion re-lending program (OECD, 2020). 34.4 billion Birr. (Ministry of Trade and been stopped. In terms of confirmed cases
value of (p= 0.05), the study regression Industry, 1997, Ministry of Urban and deaths, the pandemic is showing an
analysis revealed that partnership, economic Oyewale et al. (2020) investigated the impact Development and Housing, 2016). upward trend. A descriptive research design
considerations, and the owner's leadership of COVID-19-related cases and lockdown and a quantitative research approach were
measures on issues affecting Nigeria's Small In light of our country's unique
have a positive statistical significant effect on used in this study.
and Medium Scale Enterprises. The data circumstances and the peculiar nature of
the continuous operations of the micro and COVID-19, the effect of the virus on MSE
collected was analyzed using a linear Micro and small enterprises in the trade/
small firm during the COVID-19 pandemic. has not yet been thoroughly investigated.
probability model to estimate the impact of service and manufacturing sectors provided
The Japanese government has also made the pandemic on entrepreneurs and a Thus, the study areas were towns the primary data. Data were collected from
steps to mitigate the pandemic's negative multivariate probit model to predict the surrounding Addis Ababa, which is currently the towns of Burayou and Sululta in Oromia
impact on MSEs. The package includes factors impacting coping techniques. The the pandemic's epicenter, with the virus's National Regional State, Oromia Special
special loans of JPN 1.6 trillion offered to finding showed that the majority of transmission increasing day by day (MoH, Zone, which surrounds Addis Ababa. These
MSEs with zero-interest loans and no entrepreneurs have been affected (both 2020). The virus's rapid spread in Addis towns were chosen because they have a
collateral, a specific guarantee program for significantly and modestly) by the Ababa has a spillover effect on towns that higher number of established MSEs than
firms affected by the outbreak whose sales COVID-19 pandemics due to partial and surround the city. And, in comparison to other towns, have been impacted particularly
and other profits are declining, subsidies to total lockdown and movement limitations. other towns in the Oromia National Regional severely by COVID-19, and have a high
State, these towns have been heavily struck
Ethiopian Civil Service University 52 Ethiopian Civil Service University 53
level of pandemic spillover from Addis respectively. Then, 314 MSE’s from service/ Table 1: Details of Sample Size by Sector
Ababa. trade and 122 MSE’s from manufacturing and Towns
sectors were selected by systematic random
Sample Size Determination and sampling technique using proportional
Sampling Techniques sampling to size. Thus, a total of 169 and
The number of MSE (population) from 267 samples were selected from Sululta and
which the sample was drawn is finite and Burayou towns from both trade/service and
known; the formula provided by Yamane manufacturing sectors respectively (Table 1).
(1967) was used to determine the sample Quantitative primary data were collected
size. Here acceptable error “e” is considered using a structured questionnaire from 436
to be 5% to have a representative sample to
they do not know whether their workers or
recordings of returns properly and compete the owner or the managers themselves had
in the market better than non-educated been contacted with the virus or not. In line
operators. The survey result also showed that with this, respondents were asked whether
96.8% of MSE owners or managers were they stopped their business operation or not
educated and the remaining 3.2% were not because of fear of COVID-19. Consequently,
educated (Table 3.1). This showed that MSE 60.55% of MSE stopped their business
has provided a career opportunity for activity temporarily. Out of those who
educated operators. stopped working temporarily, 43.5%, 16.8%,
22.9%, 13.5%, and 3.7% of MSEs stopped
In terms of MSE’s owners/ managers marital working for more than three months, three
status, the study revealed that 30.52% were months, two months, one month, and less
single, 64.27 % were married, and the rest than one month respectively. Similarly,
were divorced (4.47%) or widowed (0.74%). 31.02% of MSEs stopped working partially
Because most business owners/managers are (half a day) while 8.44% did not stop their
married, the pandemic may affect them business operation despite their fear of the
MSEs. The data were analyzed using
withdraw relevant response and to keep the financially more than other marital status virus (Table 2).
descriptive methods and presented in terms
heterogeneity among sample MSE (Kothari, groups. The descriptive result also depicted
of figures and tables.
2004). that the majority of MSEs (76.92%) were Effects of COVID-19 on Employment
registered as microbusinesses, while the To analyze the effect of the pandemic on
Results and Discussion remaining 23.08 % were classified as small employment, MSE’s employment data were
There are 2149 MSE”s in Sululta town and
5051 MSE’s in Burayou town which are businesses. In the same way, 76.43% of collected at the beginning of March 2020
Descriptive Results MSEs worked in the trade/service sector, (before the outbreak of the pandemic) and
actively working with work experience of General Characteristics of MSE
two and more than two years. During the while 23.57% worked in manufacturing. during December 2020 (after the outbreak of
The following analysis was done using data According to the study results, 63.52 % of the pandemic). Accordingly, the findings of
data collecting period, our target population acquired in December 2020 from micro and
is MSEs who are working and have work MSE work in the shade constructed by the the survey depicted that 32.3% of MSEs said
small businesses in the trade/service and government, while 13.4% and 23.08% work that they reduced their workers because of
experience two years and above. The target manufacturing sectors. The result showed
population was stratified into trade/service in their own and rented premises, the pandemic, while 67.7% did not reduce
that 92.4% (403 respondents) of the total 436 respectively (Table 1). their workers. Likewise, the survey result
and manufacturing sectors after obtaining a respondents were responded properly, with
list of MSEs engaged in trade/ service and revealed that at the beginning of March
males owned MSE accounting for 57.6% and MSE’s were asked whether its workers get 2020, MSE had, on average 3.8 workers
manufacturing from the Job Creation and females owned MSE accounting for 42.4% contacted with COVID-19 or not. The
Food Security Office of each town (both permanent and temporary), whereas
of the respondents. MSE had an average of finding showed that 6.95% of MSE had been MSE had, on average, 2.9 workers in
understudy. 3.5 years of work experience. contacted with the virus, 88.09% said their December 2020 (Table 2).
workers did not get contact, and 4.96% said
The service/trade and manufacturing sectors Education is a variable which determine the
consists of 5185 and 2015 MSE’s profitability of MSE. It helps them to keep
Ethiopian Civil Service University 54 Ethiopian Civil Service University 55
employees employed and run their business Regarding the main reasons of fall in income
themselves including their families (81.6%), 85.61%, 75.93%, 48.14% , 19.35% and
demand for their product increases during 15.38% of respondents replied that their
the pandemic (5.2%) and the nature of their business was closed temporarily because of
business did not directly affect by the COVID -19, number of customers was
pandemic (13.2%). But, this does not mean reduced because of fear of the virus, demand
that these enterprises have not been affected dropped, workers stayed at home, and input
by the virus. problem were the main reasons, respectively.
Effects Of COVID -19 on Income and Agreeably, 75.19% of MSEs said that they
Savings of MSE saved some amount of money from their
To compare the effect of COVID-19 on the annual income for the year 2019 and the rest
income of MSEs, the annual income of the 24.81% did not save. The main reasons for
MSE’s for the years 2019 (before the not saving are lack of market for goods and
outbreak of the pandemic) and 2020 (after services (32%) and failure to compete with
the outbreak of the pandemic, end of other similar businesses (26%). Similarly,
Out of those MSE who did reduce workers,
December 2020) were collected. Savings 43.42% of respondents saved some portion
were asked to state the criteria behind
data were also gathered for the same years. of their annual income and 56.58% of
reducing workers. Hence, the finding of the
As a result, 92.6% of MSEs said that their respondents did not save for the year 2020.
study showed that workers were reduced
annual income for the year 2020 was reduced
with no specified criteria (61.5%), those their
compared to the annual income of the year
place can be easily covered by other workers
2019 (Table 3).
(22.3%), and workers who are not engaged in
the main activities of the business
(16.2%).However, MSE do not simply
reduce workers; they applied a certain set of
actions. Thus, allowing paid leave (30.8%),
reducing working hours (24.6%), giving
unpaid leave (23.8%), and working for MSE’s were also asked to justify why they
reduced pay (20.7%) are the main action did not reduce workers at the period of
taken by MSE to lay off workers (Figure.1). COVID-19. The survey result depicted that
majority of MSEs (67.7%) did not decrease
their employees because they had no
Ethiopian Civil Service University 56 Ethiopian Civil Service University 57
reduction of tax (11.66%), and cancellation those that stopped their work temporarily,
of utility payments (5.21%) are measures 60.3% of MSEs stopped their work for three
which need to be taken by government and more than three months. This means that
(Figure 3). the majorities of business owners have
Challenges Faced by MSE During Measures to be Taken to Combat the
COVID-19 Effect of the COVID -19 On MSEs
There are several challenges faced by MSE Different measures need to be taken by the
during COVID-19 which potentially hinders government, owners of MSE, and other
the growth of MSE. The survey result concerned bodies to make MSE resist and
portrayed that 90.82%, 35.48%, 36.72%, survive during this pandemic period. To this
19.60%, 22.83%, 16.13%, and 18.36% of effect, MSEs specifically want the
MSEs stated that main challenges of their government to take a variety of steps to
business operation were a fall in demand, the mitigate the coronavirus's negative effect on
decline of orders from customers, lack of income and employment. Consequently, the
operating finance to produce goods and survey result revealed that short term credit
services, failure to pay wage to workers, (29.53%), provision of training (27.30%),
failure to pay loans to banks, microfinance, debt cancellation (13.9%), extended debt
and individuals, and shortage of inputs to repayment period (12.41%), cancellation or
produce goods respectively (Figure 2).
Discussion
ceased working as a result of the pandemic's
The descriptive results revealed that the
spread and implies the degree of severity of
majority of MSE’s were engaged in the trade/
the virus over business activities of MSEs.
service sector. Being engaged in the trade/
Decreasing workers from their permanent
service sector makes business owners
and temporary jobs do not only affect the
contact easily with their customers more
workers and their family life but also affects
frequently than the manufacturing sector, so
the growth of the enterprise itself and
that, the likelihood of contracting the virus is
ultimately affects the economic growth of a
higher among the customers and owners of
country. This also puts enormous economic
the business and could result in, decline of
pressure on MSE in particular, as well as
number of customers, decreased revenue and
Ethiopia's GDP in general. This finding is
savings for business owners. From table 3.1,
consistent with previous studies done by
60.55% and 31.02% of MSEs were stopped
OECD (2020), Bartik (2020), and Senz
their business activities temporarily and
(2020).
partially (half a day) respectively and out of
Ethiopian Civil Service University 58 Ethiopian Civil Service University 59
One of the primary goals of establishing between the manufacturing and the service reason for the fall in income of micro and savings. A nearly similar find is also reported
micro and small enterprises is to create job sector is statistically significant at less than small enterprises for the year 2020 compared by Beraha and Đuričin (2020), OECD
opportunities for young people. Nonetheless, 1% probability level (p=0.000 & t=-6.94). to the year 2019 (Table 3.4). These findings (2020), and Shafi (2020).
the pandemic could have an impact on the Since, small and micro enterprises make up are consistent with previous studies done by
MSE supply side. It has an effect on the 57% and 13.55% of the manufacturing Bartic et al. (2020), UNDP (202b), WB Regarding challenges faced MSEs during the
number of people a firm employs, as well as sector, respectively; small enterprises (2020a) and Shafi (2020). pandemic, the key challenges reported in
the workers' and business owners' income. reduced more labor than micro-enterprises in figure 3.2 revealed that drop in demand for
From table 3.2, 32.3% of MSEs reduced their the manufacturing sector. This finding has In terms of enterprise types micro- firms' goods and services, a loss in client
workers. During the beginning of the spread important policy implications because the enterprises annual income was reduced by orders, and a shortage of operating finance to
of the virus, enterprises have, on average, 3.8 government wants to encourage young 43, 586.97 Birr while small enterprises create goods and services. Because their
employees while nearly after a year; people to work in the manufacturing sector income was reduced by 39,919.35 Birr, but, income plummeted, some businesses were
enterprises have, on average, 2.9 employees. and the sector is the backbone of the the mean difference in income between unable to repay their loans to microfinance
transition from an agricultural-based micro and small enterprise is statistically institutions and banks. Initiated by
This implies that as a result of the economy to an industrial development insignificant (p=0.4134, t=0.2190). Besides, COVID-19, there are few businesses,
coronavirus, MSEs were forced to lay off economy. A similar finding was also reported the annual income of enterprises involved in particularly those in the trade/service and
employees, on average by 0.83 workers. The by OECD (2020), Bartik (2020), and Amuda the manufacturing sector fell by 45,593.68 manufacturing sectors, have not yet resumed
t-test statistics also showed that there is a (2020). Birr whereas the income of enterprises operations. These findings do not contradict
significant mean workers difference between engaged in the trade/service sector declined with the findings of OECD (2020), UNDP
workers existed before the outbreak of the Income is a variable that determine growth by 41, 860.58 Birr, however, the mean (2020b), welter et al. (2020), and Oyewale et
virus and after the outbreak of the virus at a and continuity of enterprises. If the income income difference between enterprises al. (2020).
probability level of less than 1% (p=0.000& of an enterprise reduced significantly, then engaged in trade/service and manufacturing
t=9.71) which shows that coronavirus has MSE’s could fail to pay wages for their sector is statistically insignificant(p=0.4112 To counteract COVID -19's negative impact
put an adverse effect on the employment of employees and expand their business. MSE’s & t= -0.2246 ). This implies that being micro, on MSE economic activity, both the
the enterprises. This finding is compatible were asked whether their income is affected small, manufacturing or trade/service enterprise's owners and the government
with the findings of ILO (2020), Oyewale et by COVID-19 or not. Accordingly, based on COVID -19 adversely affect income of MSE. should devise and apply a variety of
al. (2020), Fabeil et al. (2020), Zeidy (2020), the survey result presented in table 3.3, This finding was compatible with the strategies. To solve financial problem faced
and Kassa (2021). MSE's average annual income for the year findings of Kassa, (2021) and UNDP (2020). by MSE during the pandemic, MSEs
2019 was 170,174.4 Birr and 127,433.8 Birr borrowed from individuals (50.9%) and
In terms of enterprise types, small enterprises for the year 2020, its mean difference is Savings is the amount of money left over that microfinance (26.9%). Furthermore, MSEs
were hit- hardest compared to micro- 42,740.6 Birr. has not been consumed or transferred for biggest challenge during the pandemic was a
enterprises. Small enterprises, on average, future use after direct tax payments are lack of raw materials.
reduce 2.12 workers but micro-enterprises The t-test statistics showed that there is a subtracted from current income (Cronje,
reduced, on average, 0.44 workers. This is significant mean annual income difference 2009). The findings of the survey revealed Thus, to deal with the shortage of raw
because, at the beginning of March 2020, between the mean annual income of 2019 that, in the year 2019, almost 25% of MSEs materials, MSE reduced output (59.8%),
micro-enterprises have, on average, 2.8 and the mean annual income of 2020 at a did not involve in saving due to a lack of outsourced orders (23.27%), and delayed
employees while small enterprises have on probability level less than 1%(p=0.000, market for their product resulted and failure goods delivery to consumers (17.15%). It is
average 7 employees, so that, number of t=6.0657). As the same time, MSEs were to compete with other firms, however, in the apparent that training will be critical in
workers of micro enterprises is so small and also requested to reason out for why the year 2020, nearly 57% of MSEs did not save reducing the virus's impact and
most micro-enterprise owners/mangers run annual income of MSE for the year 2020 was due to a drop in income caused by implementing preventative measures. As a
their business by themselves. declined compared to the year 2019. COVID-19 and shut down of business. result, experts from the ministry of health
Furthermore, the mean annual savings were and MSE offices trained 64.02% of
Besides, MSE engaged in the manufacturing Consequently, 85.61 % of respondents 24,865.11 Birr for the year 2019 and it was respondents on the topic of virus
sector severely affected by the coronavirus replied that their business was closed 12,345.06 Birr for the year 2020 (Table 3). containment and techniques to reduce the
compared to the trade/ service sector. temporarily because of COVID -19, 75.93% virus's impact on MSEs commercial
Manufacturing enterprises reduced, on of respondents said that number of customers The mean annual savings difference between activities and 85.2% of those who were
average, 1.85 workers, but trade/service were reduced because of fear of the virus and the annual savings of 2019 and 2020 is also trained said that the training helped them
enterprises reduced, on average, 0.51 48.14% said demand for their firms' product significant at a probability level of less than save themselves, their colleagues, and their
workers (Table 2). The t-test statistics also was dropped were the main reasons. This 1 %( p=0.000 & t=5.4948). This implies that customers, as well as kept their firm afloat
show that the mean decrease in workers suggests that COVID -19 was the main COVID-19 has a negative impact on MSE during the pandemic. MSE also wants a
Ethiopian Civil Service University 60 Ethiopian Civil Service University 61
longer debt repayment period, a tax break, were laid off employees, on average by 0.83 Finally, it is possible to conclude that (Unpublished, Department of
and more credit to establish a new line of workers and the difference is statistically COVID-19 has resulted in a decrease in Economics, Addis Ababa University/
business, such as sanitizer manufacturing. significant at less than 1% probability level. MSE’s employment, income, and savings. To www.researchgate.net/profile/
MSEs owners also said that the nearby Compared to micro-enterprise, small mitigate the effect of COVID-19 on MSE, Alemayehu_Geda )
municipal authority needs to provide more enterprises lay off more workers and in terms the government at all levels should provide
training on how to contain the infection and of sector, manufacturing hit hardest than technical assistance and training to business Baldwin, R. & di Mauro, B. (2020).
keep their business lucrative during this trade/service sector. owners who are vulnerable to COVID-19 on Mitigating the COVID-19 Economic
difficult period. This finding is in accordant how to develop a business recovery plan and Crisis: Act Fast and Do Whatever It
with the findings of Bartica (2020), WB Concerning to income and savings of MSE, new line production, extend the debt Takes. A CEPR Press VoxEU.org eBook.
(2020a), Paolo and Andrea (2020), and 92.6% of MSEs said that their annual income repayment period, and provide short-term
Fabeil et al. (2020). for the year 2020 was reduced compared to credit to help MSE recover from the virus's Baldwin, R. (2020). Keeping the lights on:
the annual income of the year 2019. negative effects. Economic medicine for a medical
Conclusion Similarly, the survey result showed that shock. VoxEU. org, 13.
MSEs annual income for the year 2019 on
The general objective of the study was to average was 170,174.4 Birr while it was Acknowledgment Beraha, I., & Đuričin, S. (2020). The impact
examine the economic effect of the Birr 127,433.8 for the year 2020. The mean The authors would like to express their of COVID-19 crisis on medium-
COVID-19 on MSEs in Addis Ababa difference was 42,740.6 Birr which is appreciation to the Ethiopian Civil Service sized enterprises in Serbia. Economic
surrounding towns of Oromia National significant at less than1% probability level. University for financing the study, as well as Analysis, 53(1), 14-27.
Regional State. The study used a descriptive the City Administrations of Burayou and
research design and quantitative research The main reason/s that made income fall Sululta for their enthusiastic cooperation Bartik, A. W., Bertrand, M., Cullen, Z. B.,
approach. Quantitative data was collected during the pandemic (Year 2020) was the during the data collection period. Glaeser, E. L., Luca, M., & Stanton,
from 436 MSEs which show conditions of closing of business temporarily because of C. T. (2020). How are small
MSE before and after the outbreak of the COVID-19 (85.61%), reduction of Authors’ Contribution businesses adjusting to COVID-19?
pandemic. Out of 436 questionnaires customers because of fear of the virus Both authors developed the proposal, Early evidence from a survey (No.
distributed to MSE’s only 403 were valid (75.93%), and dropping of demand for their designed data collection tools, and w26989). National Bureau of
with a response rate of 92.4%. product (48.14%). Besides, the mean annual conducted fieldwork; however, Meshesha Economic Research.
savings were 24,865.11 Birr for the year Zewdie did the statistical analysis and write-
The findings of the descriptive result 2019 whereas it was 12,345.06 Birr for the up, while Dessalegn Shamebo reviewed the Cronje, M. (2009). Creating a Savings
indicated that 76.92% of MSEs were year 2020, and the mean annual savings manuscript. Culture for the Black Middle Class in
registered in micro business enterprises and difference is statistically significant at a South Africa Policy.
the remaining 23.08% were registered in probability level of 1%.
small enterprises. Similarly, 76.43% of Reference
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