Recovery, Renewal, Resilience

Underrepresented groups such as women- and minority- owned MSMEs have shown a higher degree of vulnerability during the pandemic. Women- and minority- owned businesses tend to be micro in size (10 employees or less), more financially fragile, and face barriers when accessing professional and financial support services, according to the OECD and McKinsey. Past experiences of barriers to support mean that these groups are less likely to seek support or are unaware of the support that may be available to them. During a recent webinar, it was reported that these types of businesses could add £70 billion to the UK economy, if fully supported. We explore ways in which national and local government can better engage with MSMEs to develop policies and support mechanisms that will adequately address their recovery and renewal needs. The OECD and the UK’s Business in the Community recommend:

• Understand the barriers faced by these business owners by directly engaging with them, for example:
  • Establish and facilitate discussions (e.g. consultation) with MSME owners, organisations that represent them, and others such as banks, insurance companies, and professional services providers
• Design inclusive schemes that acknowledge and remove barriers, increase accessibility, and provide adequate support to women- and minority-owned businesses. Examples include:
  • Canada’s Women Entrepreneurship Strategy Fund (CAD 15 million) and the Black Entrepreneurship Program (CAD 221 million)
  • Ireland’s Women in Business 2020 Action Plan
  • Malaysia’s Short-term National Economic Recovery Plan (Penjana) which includes a USD 12.5 million micro financing program and an initiative aimed to raise funds to help finance microenterprises. Both initiatives are targeted at women entrepreneurs
• Deploy targeted advertising and collaborate with business associations, to raise awareness of new and existing aid schemes
• Reduce the bureaucracy of existing aid measures, by decreasing ex ante eligibility checks and deploying easily accessible digital portals. For example:
  • Switzerland's “bridging credit” scheme which can be applied for through a simple one-page form, increasing to accessibility of financial aid and the speed at which companies can receive assistance
• Create contract/tender opportunities that are targeted at women- and minority- owned MSMEs (see examples from Florida and Indiana)

Agriculture is fundamental to sustaining livelihoods, by providing employment, income, and being key in the response to climate change – and food security and nutrition are challenges that have been exacerbated by the pandemic. Recovery and renewal present an opportunity to reform agricultural production in line with the SDGs. One of the challenges for such reforms is funding them, given that post-COVID-19 economies will have high levels of fiscal debt. Consider the strategies proposed by United Nations Economic Commission for Latin America and the Caribbean (ECLAC) to fund the recovery and renewal actions needed for a new and more sustainable agricultural sector:

Funding and finance for response and recovery

• Focus response and recovery on food security across the most vulnerable regions, by supporting consumers and producers to acquire essential goods
• Take a regional approach to fund programs among several communities, cities, or counties, instead of focusing only on the local jurisdiction
• Implement focused tax discounts for the most vulnerable producers and consumers
• Promote payments for environmental services (PES) as a mechanism to transfer resources to producers who commit to protecting the environment, or provide an environmental conservation service
• Involve firms in specific social projects, e.g. through "parafiscal" taxes - those taxes based on employees, imports, or exports, and are used to fund part of specific programs, reducing budget pressures without risking the quality of the intervention

Funding and financing to renew

• New types of funding should be used to achieve the sustainable transformation that agriculture needs e.g. Defra’s ‘Sustainable Farming Incentive 2021 (UK) or the Agricultural Sustainability Framework (Australia)
• Invest in climate change mitigation measures in agriculture. For examples, see the following papers: ‘Technical options for climate change mitigation in agriculture’ (European Union); or ‘Strategies for mitigating climate change in agriculture’ (USA)
• Start financial inclusion programs for vulnerable agricultural producers. Such programs can be conditional on producers adopting sustainable cropping practices
• Define new approaches to social responsibility, in which firms commit to work with local government and NGOs in risk reduction programmes

Support for SME recovery is critical in the aftermath of COVID-19, as SMEs constitute the backbone of economies across the world and “account for two-thirds of employment globally” (UNCTAD, 2021). COVID-19 has exacerbated existing problems and created new ones for SMEs. The OECD report finds that SMEs are disproportionately represented in sectors of the economy that have been most severely impacted by COVID-19 (e.g. retail, accommodation and food services). “Constrained cash flows and weaker supply chains” contribute to SMEs tending to be more financially fragile and more susceptible to supply chain disruptions. Many more examples of the challenges faced by SMEs can be found both in this OECD report and others (e.g. a recent McKinsey report). The OECD report presents 15 lessons on effective policy design, including:

• Prompt delivery of SME and entrepreneurship policy support. This can be supported by strengthening digital delivery systems at both the national and local levels
• Develop start-up policies to drive innovative start-ups for recovery
• “Ensure support mechanisms are inclusive and accessible for vulnerable segments of the SME population” (e.g., minority and women entrepreneurs)
• Focus on the digitalisation of SMEs and start-ups, e.g. incentivise/provide targeted financial support/grants (local governments can sign-post local entrepreneurs and SMEs to support services e.g. Business in the Community/FSB UK)
• Establish measures to consult with entrepreneurs and owners of SMEs, to understand their needs, their priorities, and co-produce recovery and renewal plans with them

Throughout the response to the pandemic, many private sector companies have offered donations, skills, knowledge and resources to support local and national efforts to tackle effects of the virus. Businesses have a considerable role to play in recovery and renewal as they continue to support their local communities, supply chains, staff, and wider stakeholders. Advice from the World Health Organization suggests to consider asking the private sector to:

• Protect against COVID-19 by:
  • Informing stakeholders on protecting staff and communities at work, protecting jobs and livelihoods, tackling mis-information
  • Protecting businesses through: business continuity plans, supply chain continuity, maintaining essential infrastructures and services, protecting jobs, acting responsibly towards suppliers
• Participate in the COVID-19 response by:
  • Producing essential supplies, repurposing production capabilities towards making essential supplies, providing in-kind contributions, making available supplies and services
  • Providing financial support to coordinated charity drives, supporting NGO and community needs

More information on each 'ask' is available in the WHO guide along with links to other resources and information.

A guide by UNDRR and partners sets out 10 core steps of business resilience to COVID-19 that is particularly relevant for small businesses. These include:

• Stay informed. Identify at least one workplace team member to be a Focal Point for COVID19. The focal point can help coordinate readiness activities, distribute information, answer questions and to coordinate staff roles and responsibilities during an outbreak
• Identify core products and services which are essential to the survival of your business. Be prepared to change your business practices if needed to maintain delivering your essential services or products
• Communicate plans with employees and customers
• Establish policies for physical distancing, hand sanitizing, and safe working at work
• Protect employee health. Provide public health materials on COVID-19, regularly clean surfaces that are often touched, and train your staff on what your COVID-19 response plans are once you have completed them. Also maintain the privacy of employees with confirmed or suspected COVID-19 infection and inform employees that some may be at higher risk for severe illness
• Plan how to operate with absent employees
• Prepare your supply chain. Identify and talk to your critical suppliers, identify alternate supply chains, understand your position in the supply chain
• Plan to modify service delivery to customers
• Apply for crisis assistance from government and business associations
• Exercise your COVID-19 plan. Consider using existing standards to do this, such as ISO 22301 business continuity management

The World Economic Forum suggests 5 key areas which businesses should focus their recovery:

Reskilling and upskilling deeply human skills as well as digital skills

• It is critical that employers emphasise retraining workers and that governments build upskilling and reskilling into the fiscal stimulus they are injecting into economies

Supporting the jobs of tomorrow

• Employers should focus on professions that care for people, support the planet, manage new technologies and communicate products and services

Prioritizing redeployment and re-employment

• Rapidly redeploy furloughed workers to high-demand roles, such as logistics and care provision
• Provide job market insights, job market intermediation (match-making services), and job-search assistance

Re-evaluating essential work and improving the quality of jobs

• Consider increasing the payment of essential workers and improving their job security

Resetting education, skills and jobs systems for post-pandemic recovery

• Critical collaboration between employers, governments and workers both nationally and globally is essential to reskilling and upskilling individuals - especially those in low paid precarious jobs