Policy Briefs

Challenges and Prospects for SMEs, Particularly Women-led Businesses, during and after the COVID-19 Pandemic
Sunday, 27 December, 2020

The COVID-19 pandemic and consequent stringent lockdown measures have had a drastic toll on the Georgian economy. The economic downturn has significantly affected the resilience of local Small and Medium Enterprises (SMEs), whose sales decreased by almost 13% (YoY) in the first two quarters of 2020. These negative impacts of the economic contraction have been particularly severe for Women-led Small and Medium Enterprises (WSMEs). In the business-as-usual scenario, compared to their male counterparts, women face greater constraints in establishing and running enterprises in Georgia. Such gender disparities were moreover found to be exacerbated because of the strict quarantine measures introduced throughout the country.

This policy paper evaluates the impacts, specific challenges, and prospects for women-led businesses during and post the COVID-19 pandemic in Georgia, and also offers recommendations to the government, donors, and private sector stakeholders on how to cushion Coronavirus-driven harm. For this analysis, different qualitative and quantitative research methods were utilized.

Our findings reveal that the pandemic is coupled with diverse challenges and opportunities for WSMEs. In relation to the former, it appears 17% of WSMEs operating in the most adversely affected sectors likely experienced adverse economic effects, while 78% of WSMEs have felt mild financial consequences. Moreover, an increase in unpaid care work and low digital literacy in women are potential contributors to the extreme challenges that WSMEs may be facing during the pandemic. Equally though, it appears businesses digitization has the potential to increase female entrepreneurial competitiveness. However, such opportunities are conditional on the type of business, improved digital literacy, and access to digital facilities. Furthermore, the government’s economic stimulus package, especially the amendments to the Micro and Small Business Support Program and Credit Guarantee mechanisms of Enterprise Georgia, might potentially enhance the financial resilience of WSMEs, provided they are adequately informed about such support opportunities. Lastly, the current crisis can be considered a window of opportunity for advocating WSME-friendly support programs and more female-inclusive business agglomerates across the country.