Globally, SMEs Are Overcoming The Covid-19 Crisis

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Textile and apparel sectors in most countries were severely impacted due to the pandemic. Gradually, SMEs in this sector are finding new opportunities and forging ahead with confidence.

Morocco’s textile and clothing sector overcoming the Covid-19 aftermath
“As Morocco’s largest industrial employer, the textile and clothing sector provides for more than 200,000 jobs. The unprecedented crisis had shut down 90% of the sector in March and April, endangering thousands of families” explains Fatima-Zohra Alaoui, Director General of the Association Marocaine des Industries du Textile et de l’Habillement (AMITH).

However, the crisis has not discouraged the Moroccan textile and clothing sector. Many Moroccan companies reoriented their production to produce masks to meet national needs and to support local communities. Having been able to meet domestic demand, the sector is now also ready to export face masks to Europe. The AMITH and Morocco’s Ministry of Industry, Trade, Green and Digital Economy together with ITC’s GTEX/MENATEX programme have launched a series of initiatives to strengthen small businesses and enterprises to overcome the new challenges.

A new online platform called AMITH Marketplace, for example, is helping improve access to information and to connect buyers from the local and international markets with Moroccan suppliers. The platform connects members of the AMITH, who supply raw materials for the production of Personal Protective Equipment (PPE) as well as mask producers with local and international buyers. In addition, it also provides AMITH access to information about domestic production, products certifications issued by the Institut Marocain de Normalisation (IMANOR) and available stock levels. Overall, more than 153 profiles have been registered. The platform has received more than 4,500 visits from more than 11 countries such as France, Austria, United States, Australia and Canada.

Manufacturing and supplying PPE is a lifeline for many Moroccan textile and clothing manufacturers now. The sector is ready to take on its normal business of producing fashion, while continuing to be a reliable partner for the supply of medical textiles. “As destination countries start to reopen their markets and resume business, Morocco’s textile and clothing sector with the support from its government is prepared to re-establish business and export goods to Europe and other countries,” affirms AMITH’s Director-General.

The GTEX/MENATEX programme is a three-year programme, implemented by the International Trade Centre (ITC) financed by the Swiss government within the framework of the Global Textiles and Clothing Program (GTEX-Egypt, Morocco, Tunisia, Kyrgyzstan and Tajikistan) and by the Swedish government within the context of the Middle East and North Africa region Program Textiles (MENATEX – Egypt, Jordan, Morocco and Tunisia), with co-financing from the government in the case of Morocco.

Jordan textile and clothing companies forge ahead
In business for the last 90 years, the Al Qadri family is a well-known name in the textile and clothing sector in Jordan. Their women’s wear creations are particularly popular. However, the company was hit hard by Covid-19. “We had to completely stop our production for a few months. With years of work and dedication, it was not easy to watch the impact that the crisis had on our company and local sales and exports,” Engineer Ihab Qadri explains.

The company used creativity to come up with a strategy to deal with a difficult period. It used the lockdown as an opportunity for the family business to reinvent itself. “We transformed the challenge into an opportunity as the company used the curfew period for studying and evaluating our work and achievements of the past few years,” explained Ihab Qadri.

Qadri worked with a medical company to bring their idea to life. After obtaining mandatory clearances from the Jordan Food and Drug Administration (JFDA) and the Royal Scientific Society, the company received authorisation to produce a new product line called QSAFE. “With our new line QSAFE, we were able to overcome some of the challenges faced due to the crisis. Our company now produces 2000 medical masks every day, ready to be sold at home and abroad,” said Qadri. They will also begin producing medical textiles to help meet global demands for these products. Al Qadri is among the enterprises who participated in the International Trade Centre’s Covid-19 impact assessment survey conducted earlier this year. The survey aimed to study the impact of the pandemic on the apparel manufacturing industry in Jordan. Twenty-one of the participant companies had been receiving support from MENATEX.

According to the results of the survey, nearly all surveyed companies faced operational challenges due to the pandemic. Ninety-four percent of the participants experienced a decline in sales to local consumers. Half of the respondents reported difficulties in importing inputs and 26% of the companies faced issues in domestic procurement. Eighty-five percent of the participant companies had to temporarily halt production. Fifty-nine percent of the group stands ready to expand to local and regional markets. Forty-seven percent of companies intend to invest in digital platforms and e-commerce.

The International Trade Centre’s MENATEX project will continue to enable small and medium-sized enterprises to tackle the challenges posed by the pandemic and quickly get back into the market. Efforts will focus on streamlining production methodologies, improving quality as well as technical and operational capacity, discovering new offline and online markets and compliance with environmental and social responsibility standards.

Textiles and clothing companies are seizing new opportunities in Egypt
Although medical doctor Ali El Nawawi is an experienced professional in the areas of international cooperation and health, Covid-19 presented him with a completely new challenge. During the pandemic, Dr El Nawawi found himself working not as a health professional, but as an entrepreneur running a small enterprise, Scarabaeus Sacer, in the clothing sector in Egypt. Together with co-founder May Kassem, a psychologist with prior experience in the garment and textile industry, they decided to respond to the global crisis through their business.

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The textiles and clothing sector is Egypt’s second biggest industrial sector after agro industry. Exports consist mainly of readymade garments and home textiles.  The industry was among the most affected by the Covid-19 outbreak. According to the Apparel Export Council of Egypt, textile exports dropped by 29% in the first semester of the year and a decline in production of 40% is imminent. Companies also faced severe financial issues as international companies started to cancel orders and there were delays in payments and deliveries. Following the government’s guidelines to keep employees safe and in good health, Scarabaeus Sacer shifted the production to ethical, sustainable and affordable masks.

“The impact of Covid-19 on our business was surprisingly positive. We managed to pivot our production to produce cloth masks and sell them at home and internationally,” said Dr El Nawawi. According to the ITC’s 2020 SMECO report, Egypt is the leading African exporter of synthetic nonwoven fabrics, an essential material for filtered masks production. The African continent as a whole is responsible for 3.5% of the world exports of these fabrics. However, mask manufacturing in the continent has been limited and would need an allocation of 7% of the world’s synthetic nonwoven fabrics production to meet with Africa’s monthly requirement.

Kassem explains that as they saw the number of cases increasing in the country, the company proactively took the necessary measures to ensure production could continue. “As Covid-19 advanced in our country, we decided to target the Egyptian market but also to offer support to other countries in the MENA region,” she explains. As a health worker, Dr El Nawawi emphasized the responsibility to support those in the front-line fighting Covid-19. “We are a company that values ethical and sustainable production; we also donated masks to an entity called Benhayikom that supports healthcare workers in the field.”

With fresh eyes, Scarabaeus Sacer focused on improving its customer relations, infrastructure, logistics and online presence. “We had an online store from the beginning of our business. With the outbreak, we considered it important to re-structure our website to improve our clients’ shopping experience,” says El Nawawi. He believes that virtual reality and online shopping will be the new norm with the support of technological advancement.

The GTEX/MENATEX programme has adapted project activities to support Egyptian companies during the crisis. In-person workshops and events have been converted into webinars, online consultations and online coaching.  Dr El Nawawi was among the participants in these online workshops. “Participating in the project, we are exposed to new technologies, new textiles, sustainable/ eco-friendly practices, and important certification requirements for our business, in addition to crucial business and market information that we receive. This will strengthen our competitiveness in global markets,” said Dr El Nawawi.

For the future, the two co-founders of Scarabaeus Sacer, El Nawawi and Kassem, are keen to explore collaborating with global ethical brands to meet buyers interested in sustainability, to connect with universities researching new fabrics, and to introduce them to the Egyptian market.

Building trade infrastructure and knowledge
Designing South-South trade and investment projects with impact

Development programmes can help spur South-South trade and tackle economic issues that have become more daunting due to the pandemic. A new International Trade Centre (ITC) report shows governments and donors how to design and execute effective South-South programmes that have a sustainable impact on development. Drawing from case studies and interviews with ITC staff who have worked on South-South projects, Designing for Impact: South-South Trade and Investment  is a guide for good project management for trade and investment promotion. It urges learning from relevant role models to transfer knowledge and technology.

South-South trade represented 52% of developing country exports in 2018, according to Melissa Leach, director of the Institute of Development Studies, which partnered with ITC on the report. Companies from the South will generate a third of global foreign direct investment outflows by 2025, she said.

The report calls for investment in new regions, such as targeting smaller cities that are regional hubs in sectors like clothing or leather. It recommends investor-specific services and locally tailored information products – for instance, tools and activities to build communication, bridge misconceptions about certain countries or regions, and create awareness.

Building visibility in new markets
Business-to-business meetings and trade fairs are key to building visibility in new markets – as well as trust and predictability. For instance, two Indian textile investors began production in Ethiopia following SITA-facilitated exposure visits in 2018, creating more than 1,700 jobs to date. In another example, a Ugandan tannery that received SITA support to attend trade fairs targeting markets in the South achieved silver status Leather Working Group certification in 2019.

Learning is effective because business challenges are often similar among Southern countries, and the technology choices are tailored to meet those challenges. For example, a woman-owned Kenyan tea company profited from Indian know-how and diversified into rosemary cultivation. African producers of cardamom and sunflower oil have enjoyed similar benefits from knowledge and technology transfers.

Turkmenistan to launch Trade Facilitation Portal to ease cross-border trade
Turkmenistan has teamed up with the International Trade Centre (ITC) to establish an online trade facilitation portal in the country under the Ready4Trade Central Asia project funded by the European Union. One of the first steps to that end was the organisation of a technical training held from October 19-28, 2020. This training, the fourth run in a series of online capacity-building activities in Central Asian countries, follows the successful online pilot trainings organised in Kyrgyzstan and Kazakhstan.

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Turkmenistan’s Trade Facilitation Portal is set to increase transparency, harmonise trade procedures, and promote a coherent business environment for traders and SMEs in the region. Based on the existing ITC-UNCTAD model, Turkmenistan’s national trade portal will be a key addition to the already existing 20+ portals worldwide, thus allowing for a better understanding of procedures among all those countries.

Commodity-specific, this online portal will be a one-stop shop of Turkmen cross-border laws, regulations, duties and taxes. Export and import procedures information will be available on the platform, making it easier for traders, particularly in the textiles, carpets, household chemicals and agricultural sectors, to understand cross-border trade-related procedures for their products.

The Ministry of Trade and Foreign Economic Relations of Turkmenistan (MTFER) participated in the training, as the entity which will establish and operationalise the Trade Facilitation Portal in Turkmenistan. In particular, the online training workshop supported the technical team in charge of maintaining the online portal, and encompassed orientation training for the portal establishment process, including its strategic alignment to existing websites, user interface review, data collection methodology, and content management.

‘Talking from the long-term perspective, one of the objectives of Ready4Trade Central Asia project is to enhance the transparency of cross-border regulatory requirements and reducing information collection procedural obstacles for businesses, especially for SMEs. The Trade Facilitation Portal will specifically address those issues and further improve the capacity of Turkmenistan to conduct cross-border trade’, noted Rustam Alymov, ITC National Project Coordinator in Turkmenistan.

The initiative broadly resonates with Turkmenistan ‘s recently obtained status of observer at the World Trade Organization  (WTO) , which was granted to the country on 22 July 2020. Turkmenistan became the last former Soviet republic to establish a formal relationship with the WTO. The request of Turkmenistan for observer status was submitted in May 2020, when the country indicated its willingness to initiate negotiations for WTO accession within a period of five years. Turkmenistan’s observer status strengthens the country’s position in international trade and represents a first important step in providing guarantees and transparency, which should attract foreign investments. Moreover, this observer status also allows Turkmenistan to become familiar with WTO rules and procedures.

‘The European Union (EU) gives great importance to Turkmenistan’s accession to WTO because of the positive effects it will have on the future development of the country. The EU and ITC will support and assist Turkmenistan in this long process of economic adaptation. Besides, one of the main pillars of EU’s strategy for Central Asia is the promotion of interregional cooperation and regional economic integration. In this context, launching a portal devoted to capacity building and trade facilitation serves to all the above mentioned objectives of the EU priorities in Turkmenistan’, Ambassador of European Union Delegation in Turkmenistan Diego Ruiz Alonso said.

With the project ‘Ready4Trade Central Asia’, the European Union (EU) and the International Trade Centre (ITC) are joining forces to contribute to the overall sustainable and inclusive economic development of Central Asia by boosting intra-regional and international trade in the region. Beneficiaries of the Ready4Trade Central Asia project include governments, small and medium sized enterprises (SMEs), in particular women led enterprises, and Business Support Organizations (BSOs). The project operates in five countries: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

Digital solutions empowering business support organisations
Smaller firms have been among the hardest hit by Covid-19. Demand for their goods and services plummeted when the pandemic disrupted supply chains. In response, chambers of commerce and other business support organisations (BSOs) worldwide have been diligently working to support micro, small and medium-sized enterprises (MSMEs) to adapt their business strategies and put them on the path to recovery. One BSO professional in Ghana, Julius Bradford Lamptey, was astonished at how quickly the landscape for firms changed as trade flows came to a standstill.

“In the early days of the lockdown, our goal was just to assess the damage to businesses and to help make the government aware of their needs,’ said Bradford Lamptey, who is Head of Research & Advocacy of the Ghana National Chamber of Commerce & Industry (GNCCI). A study by GNCCI, which serves more than 6,500 business members, revealed that the total estimated financial cost associated with the pandemic differs and increases with firm size. On average, the extent of the effect on projected 2020 annual revenue was more significant for small (80%) and medium (80%) enterprises than micro (75%) and large (50%) enterprises.

Yet as the economy has gradually reopened after the peak of the pandemic, requests for help came flooding in. Businesses were starved of reassurance and information about market opportunities. They were keen to understand how to diversify their market risks and where they could turn to help spur new opportunities for growth and make up for lost time. And because BSO staff were suddenly forced to work from home without access to all their usual resources, digital solutions became pivotal.

In early June, Lamptey and his colleagues took part in a Covid-19-response webinar organised by ITC’s West Africa Competitiveness Programme (WACOMP). The webinar explained the functionality of the Global Trade Helpdesk – a multi-agency platform that brings together trade and market intelligence from 11 partner agencies – and how MSMEs and BSOs can use it to help weather the storm. Bradford Lamptey discovered he could access relevant information from across all of his favourite trade tools in a single platform. He could track changes in demand, export potential, tariffs and regulatory requirements.

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He was also able to share information with his colleagues working in regional chambers to help make their work more efficient and advise firms on opportunities in key value chains. In Ghana, these include value chains for cashews, cassava, mangos, cocoa and others. “My prayers were answered for our business support institution, allowing us to provide evidence-based guidance to firms much faster and to share the tool with firms to help them conduct their own research in the future,” Bradford Lamptey added.

The same need for timely and relevant information was a worry for firms on the other side of the Atlantic in Brazil. According to a recent COVID Survey with Brazilian entrepreneurs, 89% of firms had seen a fall in sales revenues, with an average fall of 69%. Juarez Leal, Senior Advisor in the Business Directorate of APEX, Brazil’s trade promotion agency, said he was anxious for the 12 million SMEs struggling for survival in Brazil. The recession in the local market has depressed sales. Still, many firms were reluctant to explore opportunities beyond the domestic market. They did not know where to begin their search.

‘The Global Trade Helpdesk is the first tool I have come across that makes so much critical information available in a single product-level search, and that really caters to the business sector by presenting information in an accessible way,’ Leal said. Firms need this information to build their resilience in uncertain market conditions and take advantage of emerging opportunities. In Brazil’s case, export flows have dropped 7% in the first half of 2020 compared to 2019, and there have been dramatic changes for the country’s trading partners. Mercosur and US markets were significantly affected by export declines of 32% and 29% compared to 2019.

To help Brazilian firms become more resilient in the future, APEX has committed to working with Global Trade Helpdesk partners to translate it into Portuguese. Interest in the Global Trade Helpdesk has surged in response to the Covid-19-related economic disruptions. The number of users of the platform has nearly tripled since it was rolled out in June 2020. More than 2,100 participants from diverse chambers, public institutions, and firms have taken part in dedicated webinars across Latin America, Africa, and Asia.

Customised webinars for apparel and textile sectors and cashew, cassava and shea value chains have also helped BSOs provide additional support to key industries in specific markets. Access to reliable, timely and relevant information is more critical than ever, with different markets being impacted at different times and to different degrees, and the onslaught of temporary trade policy measures put in place by dozens of governments around the world.

The Global Trade Helpdesk is an initiative of the International Trade Centre, the United Nations Conference on Trade and Development and the World Trade Organization with the participation of the African Development Bank, the Inter-American Development Bank, the International Chamber of Commerce, the Food and Agriculture Organization of the United Nations, the United Nations Industrial Development Organization, the World Customs Organization, the World Bank Group and the World Intellectual Property Organization.

New tool enables African businesses to find continent-wide trade opportunities as the AfCFTA begins in 2021
A new trade intelligence tool that enables firms to easily explore and compare trade opportunities across Africa has been released ahead of the start of trading under the new African Continental Free Trade Area. The African Trade Observatory was rolled out by the African Union (AU), the European Union (EU) Commission and the International Trade Centre (ITC) at an AU summit on 5 December 2020. “Trade information is vital to the promotion of trade in Africa,” AU Commissioner for Trade and Industry, H.E. Albert Muchanga said.

The AfCFTA lowers trade barriers and promotes regional economic integration. Trading under the continent-wide area is set to begin on 1 January 2021. “Economic Integration is close to the heart of the European Union and will continue to support the African Union towards its endeavour of the African Common Market,” European Union Commissioner for International Partnerships H.E. Jutta Uripilainen said.

The African Trade Observatory is especially valuable for empowering the economic operators during this Covid-19 pandemic, ITC Executive Director Pamela Coke-Hamilton said. “Today, we are putting an entire continent of trade intelligence at the fingertips of African entrepreneurs, especially to support small local firms, women and young people in making the most of new opportunities.”

The beta version of the web platform, currently available in French and English, was released during the 13th Extraordinary Session of the Assembly of Heads of State and Government on the AfCFTA. The Arabic and Portuguese versions will be available in the near future.

Following the release of two publicly available modules (Compare and Explore), policymakers and Regional Economic Communities will have access to a third Monitor module. This module will provide a range of real-time indicators on trade flows, utilisation of AfCFTA tariff preferences, tax revenues, clearance time and trade simulations, thereby facilitating the evaluation of the implementation process and impact of the AfCFTA.

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