Young entrepreneurs explain how COVID-19 is affecting their businesses
By Youth Co:Lab
31st March 2020
Co-led by UNDP and the Citi Foundation, Youth Co:Lab establishes a common agenda for Asia-Pacific countries to support youth innovation and entrepreneurship. To understand how the coronavirus pandemic is impacting young entrepreneurs and how they are responding, Youth Co:Lab conducted a rapid survey of 410 young entrepreneurs across 18 countries and a wide range of sectors.
The results present a troubling picture of how already vulnerable youth-led enterprises are struggling to survive in the face of an unprecedented economic shock. At the same time, the survey captured inspiring stories of young entrepreneurs innovating to support their communities to respond.
1. 86% of young entrepreneurs reported that coronavirus has negatively impacted their business. Among these, 1 in 3 report a major slowdown, and 1 in 4 have stopped entirely. A catering enterprise in Malaysia has put business on hold, saying, “We have cooks quarantined, bookings cancelled, investment postponed, and a co-owner stranded”.
2. Of the young entrepreneurs who report that coronavirus has negatively impacted their business, 88% have experienced reduced customer demand, 34% have experienced supply chain disruptions, 26% cannot progress government business, and 25% have experienced distribution disruption. An agritech start-up in Bangladesh provides one example, “Our entire R&D process has stumbled because lab facilities are completely shut down.”
3. As a result of the negative outlook, 35% of young entrepreneurs have had to lay off staff or reduce staff hours, 25% have had to cancel orders from suppliers, 25% have had to postpone investments, and 24% have had to reduce wages. An ecotourism enterprise in the Philippines explained why they have had to lay off most of their 20 staff, “All our packages have been cancelled, and future guests have requested deposit refunds”.
4. 86% of young entrepreneurs reported a decrease in financial turnover in the last month and 43% have had to borrow or reach into savings. A skincare business in Indonesia unable to purchase inputs or distribute their products has had to borrow 3 months’ operating expenditure to survive.
5. Looking at impacts across different sectors, enterprises in the consumer products, tourism, arts, events and hospitality sectors report the most negative impacts. Unsurprisingly, enterprises in the technology, telecommunications and education sectors report the least negative impacts.
6. Only 9.5% of young entrepreneurs reported that their business has received a tax break, loan, grant, subsidy, or other form of support. Enterprises in the Philippines, Indonesia and Thailand mentioned tax deadline extensions, and enterprises in South Korea welcomed VAT cuts for small businesses.
7. 30% of young entrepreneurs said they have connected with other entrepreneurs to discuss business strategies to survive the coronavirus crisis. Entrepreneurs in Bhutan and the Philippines particularly welcomed the support they had received from entrepreneur community groups.
Youth innovation combatting COVID-19
AI4GOV are working with national agencies to develop a COVID-19 digital triage bot. Photo: supplied.
Despite these negative impacts, the survey also revealed inspiring ways in which youth-led enterprises across Asia-Pacific are innovating to support their communities to combat coronavirus and build back better. Youth-led enterprises are fighting misinformation, mobilising community action to protect the vulnerable, and developing innovative new products and services.
AI4GOV in the Philippines is working with national agencies to develop a COVID-19 digital triage bot for medical professionals to triage cases and create predictive modelling of people infected.
Moner Bondhu in Bangladesh is offering remote mental health services to people in quarantine and fighting misinformation about coronavirus online.
AccessiWheels – one of Youth Co:Lab Philippines 2019 winners – is connecting drivers to community members to reach hospitals while public transport is suspended.
Over the coming weeks, Youth Co:Lab will showcase these and more examples of innovative youth-led responses to coronavirus from across Asia-Pacific.
At the same time, in the face of such a deep economic shock, youth-led enterprises are also relying on support. Survey respondents were asked what measures would help them to survive the crisis. The measures most commonly cited were:
Tax exemptions: For small businesses – cut tax rates, eliminate certain taxes or extend payment deadlines.
Loans: Lower interest rates for small businesses or offer subsidised, low-interest loans.
Rent and utility relief: Implement business rent holidays or controls; and reduce rates or extend payment deadlines for utilities.
Social protection: Provide wage support to small businesses to prevent staff layoffs; extend social protection schemes; and provide clearer related guidelines to businesses.
Incentives: Provide incentives e.g. preferential procurement policies to buy from local, small businesses.
Emergency relief and stimulus: Provide a stimulus package to boost consumer demand; set up an emergency fund for grants for small businesses to survive the crisis or to restart when the crisis eases.
Business transition: Set up e-commerce platforms where businesses can sell their products or services; support small businesses to transition to e-commerce platforms or remote working; subsidise internet access.
Other: Use control measures to manage disruption to supply chains and to ensure imports of vital products.
In our next blog, we will share examples of policy responses from Asia-Pacific that are helping youth-led businesses to survive.