The Covid-19 pandemic has threatened the survival and continuity of businesses with Small and Medium Enterprises (SMEs) being the most vulnerable.

With SMEs often being termed as a driver of emerging economies, Business Professionals Network (BPN) a non-profit organization involved in business development, has been working to ensure their survival, recovery and growth.

The New Times’s Collins Mwai spoke to BPN Rwanda Country Director Alice Nkulikiyinka on the state of SMEs, vulnerabilities as well as avenues of recovery.

Excerpts:

In 2020, BPN undertook a three-stage survey of Rwanda’s SMEs to determine the effects of Covid-19 on private businesses. What was the outcome of this study?

The 150 entrepreneurs in the BPN survey are SMEs and clients of the BPN Rwanda entrepreneurship support programme.

We did not make a sector-specific analysis but of course it is well known that every kind of business linked to events, tourism, and hospitality as well as private schools have suffered the most.

In general, all businesses suffered. Our study shows that 6 months into the pandemic, there was still on average a drop of 30 per cent in revenues, a drop of 30 per cent in employment and an increase in short-term debt (unpaid rent, supplier invoices, etc.)

What were the greatest vulnerabilities among the surveyed firms?

It is said that ‘success is simple, but not necessarily easy’. It is simple because there are business principles that have proven to increase chances of survival even in the most turbulent turmoil.

One of those principles is to ‘always have a Plan B’ because the journey of entrepreneurship is riddled with ups and downs. The ability to plan for problems and to solve them when they occur is an important skill an entrepreneur should possess.

Looking at Rwanda, many entrepreneurs do not anticipate problems. Most companies do not have financial reserves for unprecedented times, they have no contingency plan and many do not have the resilience mindset to deal with problem situations.

Some entrepreneurs already had good business practices in place, and a combative spirit before the outbreak of the pandemic. That increased their chances to find solutions in devastating times. You would find that within sectors, there is variability. Some companies were doing well, while others were really struggling.

From where you stand, can a majority of businesses be saved? If so, how? What are the necessary interventions?

Yes, I trust that the majority will be saved. And they should be saved. What is needed is a combination of advisory services and financial support in the form of Strategic Financial Packages with clearly defined conditionalities aimed at economic recovery.

Entrepreneurs can take rushed, bad decisions, as they are under pressure and they do not have a national/global view of the situation.

For Businesses that had or have to stand almost still for months, i.e. in tourism and hospitality, the hole is deep. I would suggest a dedicated Business Rehab Program. I tend to believe that money injection alone will not do the work.

What have been BPN’s approaches and interventions to foster enterprise survival?

As soon as the necessary lockdown was imposed, it quickly became clear to us that entrepreneurs need support more than ever. We decided to offer individual coaching to each entrepreneur in our program: Listen to their concerns, guide them in taking necessary decisions, and value their efforts in the context of Rwanda’s economy, among other topics.

We also initiated a survey in collaboration with the University of Rwanda to monitor how the BPN entrepreneurs are coping with the Covid-19 situation. Our motivation for this is that in these times of crisis, with such uncertain outcomes, we cannot drive blind as a business development partner.

We make sure that we make informed, fact-based decisions when it comes to offering support to Rwandan entrepreneurs.

Entrepreneur revenues have dropped remarkably. Entrepreneurs are facing multiple private and business needs. We saw that they need substantial financial liquidity injection to return to normal business practice.

It was also clear that for the business cycle to restart, entrepreneurs needed to continue to pay salaries. That’s how we launched a BPN Covid-19 Emergency soft loan with clearly defined conditions.

BPN also extended its services through partnerships with government, national and international institutions to reach entrepreneurs who are traditionally not included in such programs including those in the creative industries (alongside Imbuto Foundation and the Ministry of Youth and Culture), women-led businesses (with PSF Chamber of Women, UN Women and Kora Coaching), and social enterprises (alongside the Segal Family Foundation).

In collaboration with I&M Bank, we initiated a series of information sessions for entrepreneurs, providing information on the Government Recovery Fund. We continue to partner with Banks to facilitate access to available Covid-19 recovery funds.

On regular base, we have run business recovery workshops in small groups, coupled with onsite visits to the companies.

In addition to personal coaching, BPN produced short videos on how to navigate through a crisis.

In collaboration with MasterCard Foundation and RDB, we assessed the availability, production and distribution of personal protective equipment (PPEs) in Rwanda including face masks.

Through the proximity to entrepreneurs and through the Covid-19 assessment survey we have firsthand information that we share with government institutions and other stakeholders to help the public and private policymakers to make informed decisions on how to deal with the impact of the Covid-19 crisis on SMEs in Rwanda.

That’s how we see our role in the development context.

What is the impact so far on the businesses of beneficiaries of the interventions rolled out by BPN?

Lots of progress has been made. I think the biggest impact has been to be the trusted partner for entrepreneurs. They have been able to call us, to meet us, to be vulnerable with all their worries and all the difficult decisions they need to take in this unprecedented crisis.

Each business is different and the person behind is different as well. The different approaches we use, resonate with the beneficiaries differently. Let me give an example. One of the video messages we gave out was an eye-opener for one of the business owners in the BPN programme.

The video spoke about how to enhance liquidity in difficult times. She was serving a heavy non-performing loan, in addition to insufficient working capital. She was focusing on external means.

She had never thought of looking for solutions within. She decided to sell one of her properties. She paid back the loan and managed to invest in her business and even innovate. And the best is, she says "I am happy and stress-free”.

Going forward, what can be done to avoid enterprises ‘relapse’ into unsustainability as a result of the current turbulence?

The duration of the global crisis is still unknown. Entrepreneurs will continue to need support. There is a risk that non-restricted financial recovery packages will have little impact on economic recovery. Money alone will not help overcome the impact of the pandemic. Coaching and advisory are a must.

Entrepreneurs are part of the solution out of this crisis. Good entrepreneurs are not passive recipient of help. Rather, they are active actors looking for solutions themselves.

They look out for how they can help Rwanda through this crisis. We need to have this vision in mind. That is the only way SMEs will emerge as strong catalysts for our economy.