Young Entrepreneurs Staying Ahead as the Effects of Covid-19 Catches Up with Jamaica

 

Members of the Young Entrepreneurs Association (YEA) of Jamaica have already begun to feel the effects of the virus as early as January after news broke of the outbreak in China.

Some members have already begun experiencing reduced demand for some of the products and services. Others have been finding it difficult to access inputs required for production, particularly alcohol. Some local distributors of the product have indicated that they are in the process of revising prices based on the global impact.


Members in the health sector have begun scaling down their operations in order to protect their clients and staff. Entrepreneurs in the tourism and entertainment sector have begun experiencing cancellations. Bookings at a localrecording studio, yesterday, received a full day of cancellations as persons moved to limit their interactions with others.

Persons in the shipping industry have seen reduced shipping of items and there are delays in receiving items shipped. It is suspected that this may be what is contributing to the scarcity of some inputs at the moment. Some members have reported increased strain on their cash flow as they move to purchase increased sanitization materials, carry out sanitation exercises and increase bulk buying. Those in the service industry are already bracing themselves for reduced capacity based on the Prime Minister's recent announcements to close schools for 14 days. Meanwhile, these businesses will still have to continue to pay salaries. Small businesses that serve small businesses are expected to be the hardest hit.

  

The shut down of many supply chains out of Asia is also expected to significantly impact our members’ ability to secure some of the inputs and raw materials needed and prices are expected to escalate rapidly. 

With the recent announcement by the Ministry of Health, that approximately 1.7 million people in Jamaica may be affected by the virus, things are expected to worsen. In the event that the Ministry's projections prove true, this will have a further negative impact on the already limited human resource capacity of micro, small and medium enterprises (MSMEs) which will lead to a shrink in the productive capacity of Jamaica.

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 Urgent Interventions Required 

The YEA lauds the government's recent tax credits, fee and GCT reductions announced by Minister Clarke in his budget presentation and the extension of the tax filing to March 25, 2020. These are indeed timely interventions that will help to cushion some of the anticipated negative effects. We, however, believe that the overall intended impact may be nullified for some items if distributors and retailers are forced to increase prices. Additionally, with MSME’s representing over 95% of Jamaica’s productive sector, a lot more will be required by both the public sector and large private sector players to ensure the sustainability of businesses and the economy.

The YEA is calling for private sector intervention particularly from financial institutions and utility companies to consider short term interest rate reductions, payment holidays and moratoriums during this period. Institutions are also urged to implement helplines, online platforms and other remote customer service facilities where possible. The YEA is also encouraging larger players who have a tendency to delay payments to small businesses to shorten turnaround times as much as possible as cash flow during these times will be critical.

We are also calling for the government to consider grants to provide financial reprieves and also to encourage the production of goods that may become short in supply, for example, toiletries and sanitation products such as hand sanitizers and the like.General leniency is required among all players at this time and we encourage all businesses to exercise leniency throughout the period.

While these interventions will go a far way to enable sustainability, our entrepreneurs are cognizant of the fact that there is a lot that will depend on us being adaptable to change and there is a lot we can do for ourselves.

As an Association, we have remained proactive and many of the interventions being implemented at this time are in line with our 5-year plan for enabling entrepreneurial innovation towards advancing economic growth and social transformation. In line with this plan, we have been moving our team into gear to continue to support our entrepreneurs in the event of a widescale outbreak. 

In January 2020, we began an upgrade of our online presence including the development of a more interactive website and members’ portal which will allow online registration, customer service, surveys, and online training. We have also begun, at the executive level, the use of online webinars and meetings and if necessary, we stand ready to take our monthly meetings and other engagements online. We are  been encouraging many of our members to implement similar measures in their own businesses where possible. 

While the effects of the coronavirus are anticipated to be largely negative, this virus could have a potentially positive effect on the growth of the MSME sector and the economy if managed well.  Some of our members in the pharmaceutical and sanitation industry are experiencing significant growth. Our members are also responding well to the changes and have been exploring flexible working arrangements which can be very positive for the economy post-COVID-19.

There are a lot of opportunities for us as entrepreneurs. All entrepreneurs are encouraged to use this crisis as an opportunity to evaluate and sure up their business models to make them more cost-efficient, lean smart and fit. Staying close to a good support network like the Young Entrepreneurs Association is also recommended. Only the fittest of the fittest will survive.

We have also consistently advocated for the MSME sector to be tapped by the Government as a source of innovation and solutions to national challenges. This impending outbreak is one such challenge that will require innovation and an all hands-on deck approach for solutions.

 Jamaicans by nature are very enterprising and innovative and we expect to see an uptick in new business ventures to address gaps in the market place. We have also been pushing the Buy YEA Initiative to encourage persons to buy from our local entrepreneurs. We believe a lot of the interventions could assist with enabling these positive risks.

This virus could push Jamaicans and Jamaica on a whole to be more self-sufficient, consuming what we create and creating what we consume. This crisis may prove good for productivity, economic growth and social transformation in the long run.