Phiwa Sikhondze
The economic landscape for Micro, Small, and Medium Enterprises (MSMEs) in Eswatini has been severely impacted by the COVID-19 pandemic and the Russia-Ukraine crisis, according to a recent study on the impact of COVID-19 and the Russia-Ukraine Crisis on MSMEs in Eswatini.
A recent study conducted by the United Nations Economic Commission for Africa (UNECA), in collaboration with the Sub-regional Office for Southern Africa (ECA SRO-SA), highlights the significant challenges faced by the MSME sector during these tumultuous times.
The Country Report for Eswatini was authored by Lunga Simelane, the ECA SRO-SA Consultant, which encompassed 283 enterprises across the country, found that a staggering 84% of businesses were negatively affected by the pandemic, and 34% were forced to cease operations.
According to the study, the Russia-Ukraine crisis, coupled with civil unrest, significantly impacted revenue growth for most MSMEs in Eswatini.
The industry and services sectors were the most affected, experiencing negative sales revenue growth of 54% and 59%, respectively, while the agriculture sector saw a 22% decline in 2020. These findings are part of a study examining the effects of COVID-19 and the Russia-Ukraine crisis on MSMEs in Eswatini.
The government’s response, including the MSME Revolving Fund and a vaccination campaign, provided some relief, allowing businesses to embark on a recovery path.
However, the subsequent global and regional upheavals, especially the supply chain disruptions stemming from the Russia-Ukraine conflict, compounded by local socio-political unrest, have hindered these efforts.
The study, part of a broader analysis across Southern Africa, highlighted the challenges faced by Eswatini’s MSMEs, such as inflation, low demand for goods and services, and the rising cost of inputs. The services sector, in particular, felt the brunt of these challenges, with 45% of enterprises citing inflation as a major obstacle.
Despite the difficulties, the sector’s adoption of technology and innovation during the pandemic was minimal, with only 6% of businesses integrating new tools and processes. This points to a need for improved infrastructure and financial support to foster technological advancement within the sector.
Furthermore, the study revealed a significant gap in knowledge regarding international markets and trade agreements, with many MSMEs unaware of key trade deals like the African Continental Free Trade Area (AfCFTA).
Looking ahead, the MSME sector in Eswatini maintains a cautiously optimistic financial outlook, with over half of the businesses expecting improvements. To realize this potential, the study recommends that the government and stakeholders increase MSMEs’ exposure to technology, enhance their capacity in international trade, and review the MSME policy and regulatory framework to better support business growth and regional market integration.