Movement restrictions and curfews to curb the spread of the COVID-19 virus initially had a severe impact on small- and medium-sized enterprises (SMEs) in Iraq. Despite the lessening of lockdowns across the country, SMEs continued to be affected negatively. To measure the losses and investigate how SMEs are coping with the economic impact as the pandemic continues, the International Organization for Migration (IOM) in Iraq, the Food and Agriculture Organization (FAO), and the International Trade Center (ITC) launched a panel study following 893 enterprises representing 16 different sectors across 15 governorates of Iraq.
Findings show that between February and September SMEs have experienced reductions in production of 53 per cent and employment of 27 per cent, on average.
Between June and September, just over one quarter of businesses had difficulties accessing their most important inputs and half of SME owners faced lower domestic consumer sales. Thirty-eight per cent of SMEs interviewed reported that they were at risk of permanently shutting down in September. The SMEs in the study also experienced on average an increase in the gender gap from 1 woman per 13 men in February to 1 per 18 by the end of August.
Between June and September, the most common approach to cope with financial challenges was to requested leniency in paying financial responsibilities, a deviation from June when the plurality SMEs resorted to laying off employees to stay afloat. Findings show some recovery in the labor market, possibly due to the pivot of SMEs’ strategies away from firing employees to save money. Findings also found increased revenue across all sectors between June and September, possibly due to rejuvenated economic activity and selling products at higher prices.
The first round of data collection took place from 22 June to 7 July 2020 and the second round from 9 to 18 September. A third round will take place in November and December 2020 to continue analyzing the impact of COVID-19 crisis on production, labor, revenues and access to inputs.