GAIN’s response to support food system SMEs during the pandemic


Nairobi, 23 June 2021 - 

The impacts of the COVID-19 pandemic on Small and Medium Enterprises (SMEs) in the food system have been well captured over the last year. Before COVID-19, SMEs in low-and middle-income countries (LMICs) were already facing several challenges that limited their ability to grow and increase production of affordable nutritious foods. These challenges included limited access to affordable financing to scale production, to knowledge and technical support to improve food safety and quality, and to networks to grow and share knowledge. COVID-19 has further worsened this situation and surfaced more latent food system vulnerabilities, in terms of both demand and supply.  Some universal challenges firms have faced include declining revenues, difficulty accessing markets and inputs, decreased consumer purchasing power and uncertainty.

But SMEs are centralto food systems, not least in LMICs where they provide nutritious foods while also supporting local economies and livelihoods.In Africa, most households are net food buyers, and it is estimated that up to 70% of nutritious foods are brought to market through the activities of SMEs [1]. With the fortunes of SMEs in doubt in the face of COVID-19 and associated policy responses, supporting businesses in the agri-food sector was urgent. In mid-2020, the Global Alliance for Improved Nutrition (GAIN) set up a COVID response initiative, the Keeping Food Markets Working (KFMW) programme, to provide rapid support to food system workers, SMEs supplying nutritious foods, and fresh food markets. The SME-focused component is providing emergency business guidance and financial support to SMEs across seven countries in Sub-Saharan Africa and Asia, aiming to address immediate needs while building longer-term resilience.

Seun Sangoleye, Baby Grubbz Mum in Chief, Lagos, Nigeria © GAIN / Makmende

Seun Sangoleye, Baby Grubbz Mum in Chief, Lagos, Nigeria © GAIN / Makmende

Keeping SMEs Open

Through this work, emergency financial support in the form of operating capital to help firms keep staff and improve safety at the workplace has helped buttress the liquidity of SMEs. These grants have covered costs such as salaries, inputs, sales, and transportation. Over 100 SMEs across Kenya, Nigeria, Tanzania, Mozambique, Ethiopia, Bangladesh, Pakistan, and Rwanda have so far received emergency cash to support their operating expenses.

Wimmsy Dairy Limited, a Kenyan firm that employs about 1,000 people, directly and indirectly, experienced a 40% decline in demand for milk at the beginning of the pandemic and laid off 16% of its staff. The support had immense impact: ‘’With the KFMW intervention, we were able to pay customers and staff on time, and re-hired staff that had been laid off. The support also helped us purchase PPEs and fumigants, which were not initially budgeted and would have been impossible for us to procure owing to the non-payment from key customers’’, said Winfred Wandimi, the firm’s owner.  

Shambani Milk Limited, a dairy business in Tanzania, saw its gross profit drop by 39.7% in 2020. Owner Florent Nguma told GAIN, ‘’We used the fund to procure protective gear and marketing activities to continue supplying and promoting milk as a nutritious food. It also enabled us to continue buying milk from our farmers’’.

Baby Grubz Nigeria, which produces complementary baby and infant foods, used the KFMW support to retain staff, resume production, and procure packaging materials to ensure continued supply of its products.

Tailored technical assistance and bespoke training are also being provided to help firms build resilience and prepare for post-COVID trade. While the impact of the pandemic has lessened over time, businesses continue to be affected by the long-term effects of COVID-19 and related control measures. A recent review of 150 different interventions that have been implemented by different stakeholders revealed a strong focus on rapid and strategic interventions [2]. It is therefore necessary that interventions start to also focus on systemic support to build enduring resilience. Such support includes helping firms transition to e-commerce and providing capital for pivoting to more shelf-stable products, such as ultra-high-temperature-pasteurised (UHT) milk, solar-dried fruits and vegetables, and pre-cooked cereals and pulses.

References


[1] Demmler KM. The Role of Small and Medium-sized Enterprises in Nutritious Food Supply Chains in Africa. Global Alliance for Improved Nutrition (GAIN). Working Paper Series #2. Geneva, Switzerland, year. DOI: https://doi.org/10.36072/wp.2

[2] Hansen, Angela R., Chase Keenan, and Eilif Ronning. 2020. Weathering the Pandemic to Build Back Better: Options for Supporting SMEs in Low- and Middle-Income Countries. Global Alliance for Improved Nutrition (GAIN). Options Paper #1. Geneva, Switzerland, 2020.

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