Sweden and UNDP support small and medium enterprises to overcome the crisis generated by COVID-19
The pandemic has seriously affected micro, small and medium enterprises (MSMEs), and with them thousands of families from Moldova, who have lost their jobs and livelihoods. MSMEs represent over 95% of country’s private business and employ over 60% of country’s population.
MSMEs contribute the most to creating jobs, but also proved to be the most vulnerable to crises, regardless of their size, sector, turnover, and location. A survey assessing COVID-19 impact on MSMEs and their needs, recently carried out by UNDP at the local level, reveals a grim reality: 1/3 of companies have capital/cash resources which would cover at most three months of their operations, only 12% of them have access to external financing sources, and 50% have no adequate internal procedures for managing crisis situations. All these are significantly amplified by the low level of legal knowledge and quality of contracts concluded with partners, as well as reduced diversity and limited or inexistent access to internal and external markets. Access to information and support for improving company’s skills or restructuring the company in COVID-19 crisis is also a challenge for many enterprises.
Exporting companies – among the most affected by the pandemic
The COVID-19 crisis has severely impacted the exporting companies. According to Natalia Calenic, Deputy Chair of the Chamber of Commerce and Industry of Chisinau, it is rather difficult to estimate at the moment what would be the exact impact of the crisis on exporters, but it is certain that reduced foreign demand and the raw material crisis have determined the majority of companies from both banks of the Nistru river to suspend totally or to reduce significantly their exports.
The data of the National Bureau of Statistics show that during the first three months of 2020, due to decreased demand in the countries affected by COVID-19, the volume of goods traded on foreign markets from the right bank of the Republic of Moldova decreased by 7.9%. A higher impact is registered in the exporting branches: manufacturing of parts for motor vehicles and engines, manufacturing of wires and cables, connection devices for wires and cables, as well as manufacturing of textile products and garment items, processing and preserving of fruits and vegetables.
According to a study conducted by the Institute for Development and Social Initiatives (IDIS) “Viitorul” with support from Sweden, as part of the UNDP Project “Advanced ross-river Capacities for Trade” (AdTrade), the export trade from the left bank of the River Nistru and the internal trade with the right bank registered negative values, being in January-May 2020 at a level which is 9% below the level of reference from the previous year, because of the pandemic’s effects, including of the measures applied to avoid COVID-19 spread. During the first five months, the total value of trade turnover and exports between the two banks of the river decreased by 13.6%, and the supplies on the right bank for the majority of product groups reduced drastically.
A package of immediate support for MSMEs from both banks of the River Nistru
As a response to the challenges faced by the MSMEs from both banks of the Nistru river, UNDP Moldova, with the financial support provided by Sweden, launched a series of master classes for exporters, organized in partnership with the Chambers of Commerce and Industry of Chisinau and Tiraspol, under the Exporter’s Academy. This initiative consists of a series of trainings, transfer of experience, and online guidance for entrepreneurs from both banks of the Nistru river, for them to adapt their businesses to the new realities, to find new niches on the market, and to identify alternative supply solutions.
These master classes contribute to supporting companies from both banks of the river to diversify, adapt and create more inclusive and resilient business models and products, and to increase their competitiveness for accessing foreign markets. The topics of the online trainings respond to the immediate needs of producers from both banks of the Nistru river, which were identified during the assessment of COVID-19 impact on MSMEs.
Response to the pandemic crisis: we adapt and become stronger
“The participants were very active during all online events; they have come up with questions and shared their experience in business development during crisis. We are so glad that thanks to the support provided by Sweden, UNDP, and Chambers of Commerce and Industry, companies from both banks of the Nistru river became more competitive and better informed in the area of exports, hence being able to cope with the new challenges,” states Natalia Calenic, Deputy Chair of the Chamber of Commerce and Industry from Chisinau.
The following were among the topics tackled during the master classes:
- Certification of company’s management system
- Identification of distribution channels on the local and external markets under pandemic crisis conditions
- Digitalization of business and online sale
- Legal basis for online transactions
- Customs procedures and import-export operations
- International contracting and operation with INCOTERMS 2020
- Geographic indications and problems related to intellectual property
- Strategies for accessing the EU market. Identification of new niches in the context of COVID 19
- Post-lockdown international trade: practical experience of entrepreneurs from European Union countries
Being guided by well-known experts in different economy areas, trainers and entrepreneurs with experience from Belgium, France, Germany, Czech Republic, Romania and Bulgaria, over 500 of entrepreneurs from both banks of the Nistru river learned how to harness the changes emerged as a result of COVID-19 crisis and how to get adapted to the new realities.
Any crisis is like an X-ray which exposes the weaknesses of a company
“Innovation and capacity to get quickly adjusted to the new conditions are indispensable elements for business sustainable development. Any crisis, just like the one provoked by the novel coronavirus, is like an X-ray which exposes the weaknesses of a company. That’s why the crisis should be used as an opportunity for reinventing the business, for increasing the competences and launching new products, which may be offered under the current conditions,” mentioned Vladimir Imbirovski, Director General of “Santino-Service” LLC, specialized in manufacturing plastic material items. During one of the online sessions, he has shared his experience of a successful exporter, telling about his trade practice using online resources, such as Amazon, but also about the measures undertaken to adapt his business during the pandemics.
COVID-19 – “a push to reinvent our business”
Maria Pleșca attended all the master classes organized until now. She is cofounder and administrator of a company from Chisinau, which manufactures protection clothes and uniforms, and who makes her first steps to extend the activity of the company over new markets. “The crisis generated by COVID-19 was like a push that determined us to reinvent our business. Those who fail to adjust now their operations, will have no chances of success in business – this is the main lesson learnt. To be able to cope with the new requirements, we asked for the specialists’ advice during these master classes. It was extremely useful, as we have identified new perspectives, got familiarized with new trends in the area of international trade and found out about the new legislative provisions related to import-export operations,” tells the entrepreneur.
According to her, the examples presented during the online sessions show that there are lot of opportunities despite the pandemic, which may be used for business development. The first one is the digitalization of the business process, in other words – e-trade. “This aspect is worth to be taken into consideration, as marketing switches more to online, and if you want to find new trade markets, you may do it with Internet help, just by launching an online shop. A company’s digitalization also means a more efficient management of all its processes due to the big capacity to analyze and collected data,” considers Maria Pleșca.
We have been helped to boost the innovative potential of our business
Inna Linnic, director of a company producing pre-baked and frozen bread and bakery products from Tiraspol, stated that these master classes were like a guide for overcoming the consequences of pandemic crisis. “We have obtained a lot of advice and useful information, which will help us to increase the innovative potential of our business and to get adapted and take the first steps towards external markets. A young company, just like ours, should know the strategies for market identification and different data about its size and structure, as well who the potential clients and competitors are,” mentions the entrepreneur.
The assistance provided by UNDP for local business recovery on both banks of the River Nistru is rather complex. According to the study carried out by IDIS under the UNDP/AdTrade Project, the trends of decreasing international trade will continue in 2020 and will get even worse due to the impact of COVID-19 pandemic on the economic activity in the region, reduced production in agriculture, imposed restrictions for cereals’ export and economic slowdown in some countries which serve as destinations for the exports from the region.
Specific assistance for unspecific situations
“In this context, UNDP will further support about 100 MSMEs from Moldova by launching dedicated grants’ programs for business support, focusing on improving companies’ resilience towards crisis, by increasing their access to technologies and equipment, infrastructure and markets, as well as by promoting financial and legal competences,” mentions Olesea Cazacu, Programme Analyst, UNDP Moldova.
The assistance provided by UNDP will be focused as well on building B2B contacts, business development and consultancy services, digitalization processes, as well as facilitation of direct access to markets, including by increasing the association capacities of the small producers from both banks of the Nistru river for developing collective export offers and promote them efficiently on the target markets.
UNDP also contributes to other SMEs support projects, such as the Moldova Startup National Program - a complex project for the digital transformation of IT and non-IT SMEs, developed with the support of USAID and Sweden, together with the National Association of Companies in the field of ICT, Moldova IT Park, UNDP and Organization for Small and Medium Enterprises (ODIMM). The program will provide support for at least 40 small and medium-sized businesses in the form of automation services and solutions, digitization services, access to legal and tax advice, e-commerce counseling, and integrated solutions for business process automation.
All these measures shall meet the needs of the MSMEs as a result of the crisis provoked by the pandemic and will help them to get adapted to the new requirements, preserving their essential role of creating jobs and sustaining the economic growth of the country.