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2023 Annual Report: Mobilizing for Systemic Change
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Introducing: WE Finance Code

COVID-19 (Coronavirus)

Response Measures Supporting SMEs

ADB: The Asian Development Bank (ADB) announced 6.5 billion initial package to address the immediate needs of its developing member countries (DMCs) includes $3.6 billion in sovereign operations for a range of responses to the health and economic consequences of the pandemic, and $1.6 billion in non-sovereign operations for micro, small, and medium-sized enterprises, domestic and regional trade, and firms directly impacted. ADB will also mobilize about $1 billion in concessional resources through reallocations from ongoing projects and assessing possible needs for contingencies. ADB will make available $40 million in technical assistance and quick-disbursing grants.

AFDB: has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.  The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%. AFDB is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.

EBRD: To respond in solidarity with its shareholders, countries of operations, partners and clients, EBRD has unveiled an emergency €1 billion “Solidarity Package” to establish a resilience framework comprising €1 billion of new and additional funding for existing clients, comprising emergency liquidity, working capital and trade finance.

IDB: The IDB has up to $12 billion in resources that can be programmed to countries requesting support for disease monitoring, testing and public health services. The Bank can also work with countries that have undisbursed loan balances to redirect resources to pandemic-response efforts.

ISDB: IsDB Group is setting-up a special ‘Strategic Preparedness and Response Facility’ of US$730 million[v] to mitigate the negative health and socio-economic impact of the COVID -19 pandemic. This will include US$280 million from the Bank and Islamic Solidarity Fund for Development for sovereign projects and programs, US$300 million from International Islamic Trade finance Corporation (ITFC) for trade finance and US$150 million from ICIEC for insurance coverage.

WBG: The World Bank and IFC’s Boards of Directors approved an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19.  Within this package, IFC has announced a $6 billion intervention which includes $2 billion to expand trade financing for SMEs in emerging markets; $2 billion to expand working capital finance available through IFC client banks; and $2 billion in direct financing for companies in the healthcare sector or other sectors with COVID-19-related financing needs.   Example of program being developed in Vietnam: The proposed program in Vietnam aims at supporting the most affected sectors through the combination of targeted tax and financial measures as well as assistance to the most vulnerable firms and employees. The program aims to stimulate aggregate demand, through accelerating disbursement of the public investment program. Encouraging priority reforms in the development of a digital economy (i.e. encouraging e-payments, e-commerce, and tech adoption) and addressing supply chain disruptions, and the further integration in global value chains by meeting the diversification needs by multinationals seeking alternative sources.

DfID: Announced a £46 million aid package to fight the new coronavirus, including funding for a rapid diagnostic test and assisting health system preparation in vulnerable countries. No indication of SME specific support at this time.

European Central Bank (ECB): Announced measures to ensure that its directly supervised banks can continue to fulfil their role in funding the real economy as the economic effects of the coronavirus (COVID-19) become apparent. The ECB will allow banks to operate temporarily below the level of capital defined by the Pillar 2 Guidance, the capital conservation buffer and the liquidity coverage ratio. The ECB considers that these temporary measures will be enhanced by the appropriate relaxation of the countercyclical capital buffer by the national macroprudential authorities.

European Commission (EC): To bring immediate relief to hard-hit SMEs, the EU budget will deploy its existing instruments to support these companies with liquidity, complementing measures taken at national level. In the coming weeks, EUR1 billion will be redirected from the EU budget as a guarantee to the European Investment Fund to incentivize banks to provide liquidity to SMEs and midcaps. This will help at least 100,000 European SMEs and small mid-caps with about EUR 8 billion of financing. They will also provide credit holidays to the existing debtors that are negatively affected.

European Investment Bank (EIB): The EIB Group has proposed a plan to mobilize up to EUR 40 billion of financing. This will go towards bridging loans credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps. The EIB Group, including the European Investment Fund (EIF) which specializes in support for SMEs, will work through financial intermediaries in the Member States and in partnership with national promotional banks. They will provide 1) guarantee schemes to banks based on existing programs for immediate deployment, mobilizing up to EUR 20 billion of financing, 2) liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of EUR 10 billion, and dedicated asset-backed securities (ABS) purchasing programs to allow banks to transfer risk on portfolios of SME loans, mobilizing another EUR 10 billion of support.

IMF: The IMF is making available about $50 billion through its rapid-disbursing emergency financing facilities for low income and emerging market countries that could potentially seek support. Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility. The Fund’s Catastrophe Containment and Relief Trust (CCRT) can provide the poorest and most affected countries with grants to pay off debt service to the Fund, freeing up vital resources for containment and mitigation of the pandemic. The IMF will continue to play its role at the center of the Global Financial Safety Net, facilitating and coordinating support from other International Financial Institutions, Regional Financing Arrangements, and bilateral donors, as well as (if called upon) between members with established bilateral swap lines.

UN Women:  UN Women is aiming to bring up-to-date information and analysis on how and why gender matters in COVID-19 response. UN Women is working with partners to make sure the gender-differential impact of COVID-19 is taken into account in the response strategies at country, regional and global levels. This includes supporting gender analysis and sex-disaggregated data collection, so that women’s needs and realities do not fall through the cracks, even as we are trying to get more data and knowledge about COVID-19. They are also focusing on programmes that build women’s economic resilience for this and future shocks, so that they have the resources they need for themselves and their families. For example, in China, UN Women focused on economic recovery solutions to support small and medium businesses owned by women, to mitigate the negative economic impact of the outbreak. It is has also supported outreach campaigns to promote women’s leadership and contributions in the COVID-19 response, reaching more than 32 million people.

USAID: The U.S. Government announced a commitment of $37 million in financing from the Emergency Reserve Fund for Contagious Infectious Diseases at the USAID for 25 countries affected by novel coronavirus COVID-19 or at high risk of its spread. Funds will be provided to the World Health Organization, other multilateral institutions, and programs led by USAID’s implementing partners. No indication of SME specific funding/support at this time.

Amazon: created a $5 million Neighborhood Small Business Relief Fund to provide cash grants to Seattle-area small businesses that need assistance to get through economic challenges related to COVID-19. The fund is intended for businesses with fewer than 50 employees or less than $7 million in annual revenue.

Cisco: is committing $225 million in cash, in-kind, and planned-giving to support both the global and local response to COVID-19.  Cisco is allocating $8 million in cash and $210 million in product to the global coronavirus response. They are focusing these resources on supporting healthcare and education, government response and critical technology. Part of this will go to the United Nations Foundation’s COVID-19 Solidarity Response Fund, supporting the World Health Organization’s (WHO) worldwide efforts to help prevent, detect, and manage the spread of COVID-19. Cisco’s Country Digital Acceleration (CDA) program, is providing funding for heads of state, government agencies, and businesses to rapidly deploy COVID-19-related technology solutions. We are also empowering those on the front lines with access to our critical technologies with our free Webex and Security offers. 

Facebook: is creating a $100 million grant program for small businesses by providing both advertising credits and cash grants that can be spent on operational costs such as paying workers and paying rent. It will be available to up to 30,000 businesses in over 30 countries where Facebook operates.

Gates Foundation: jointly with Wellcome and Mastercard allocated $125 million in both new funding and money already earmarked to tackle the COVID-19 epidemic. The money will be used to identify potential treatments for COVID-19, accelerate their development, and prepare for the manufacture of millions of doses for use worldwide. The expertise of pharmaceutical companies will be critical to this endeavor, named the COVID-19 Therapeutics Accelerator.

Walmart: Walmart and the Walmart Foundation have committed $25 million to support organizations on the front lines responding to the outbreak. $5 million to support global efforts to help countries prevent, detect and manage the coronavirus; $10 million to support food banks, school meal programs and organizations that provide access to food for underserved populations; and $10 million to support efforts in local communities in the United States and international markets.

There are several ways the coronavirus may affect the economy, especially SMEs, on both the supply and demand sides.

On the supply side, reduction in the supply of labor from unwell workers, from caregivers who have to take care of kids because of school closures. But an even larger effect on economic activity occurs because of efforts to contain the spread of the disease through lockdowns and quarantines, which lead to a drop-in capacity utilization. On the demand side, the loss of income, fear of contagion, and heightened uncertainty will make people spend less. Workers may be laid off, as firms are unable to pay their salaries. These effects can be particularly severe on some sectors such as tourism and hospitality.

The impact of the virus could have potential spill-overs into financial markets, with further reduced confidence and a reduction of credit. These various impacts are likely to affect both larger and smaller firms. However, the effect on SMEs may be especially severe, particularly because of higher levels of vulnerability and lower resilience related to their size.

Articles about impact of COVID on SMEs:

Reporting on gender and gender data