Regional: Supporting Recovery by Micro, Small, and Medium-Sized Enterprises in the Pacific from the Effects of the COVID-19 Pandemic
The regional knowledge and support technical assistance (TA) will support micro, small, and medium-sized enterprises (MSMEs) to recover from the economic effects of the coronavirus disease (COVID-19) pandemic and become less vulnerable to a prolonged economic downturn in the Pacific developing member countries (DMCs) of the Asian Development Bank (ADB). The TA will help build and enhance the capabilities of MSMEs affected by COVID-19 to recover and grow in the post-pandemic period by (i) strengthening the enabling environment for MSMEs and (ii) improving access by MSMEs to business development services and finance.
Bharat, Vimlesh Vikash
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|Project Name||Supporting Recovery by Micro, Small, and Medium-Sized Enterprises in the Pacific from the Effects of the COVID-19 Pandemic|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
|Sector / Subsector||
Finance / Small and medium enterprise finance and leasing
|Gender Equity and Mainstreaming||Effective gender mainstreaming|
|Description||The regional knowledge and support technical assistance (TA) will support micro, small, and medium-sized enterprises (MSMEs) to recover from the economic effects of the coronavirus disease (COVID-19) pandemic and become less vulnerable to a prolonged economic downturn in the Pacific developing member countries (DMCs) of the Asian Development Bank (ADB). The TA will help build and enhance the capabilities of MSMEs affected by COVID-19 to recover and grow in the post-pandemic period by (i) strengthening the enabling environment for MSMEs and (ii) improving access by MSMEs to business development services and finance.|
|Project Rationale and Linkage to Country/Regional Strategy||
Pacific economies have been severely impacted by COVID-19 pandemic. ADB estimates the losses from COVID-19 pandemic to range from 6.4% to 9.7% of the global gross domestic product. The losses could be higher in Pacific DMCs due to their remoteness, small size, wide geographic dispersal, narrow economic base, and exposure to disasters triggered by natural hazards. The ability of most Pacific DMCs to cope with multiple shocks is limited by weak capacity and a lack of resources. The health of their economically vulnerable and poor populations is at risk, as health infrastructure is inadequate to respond to the pandemic. Recognizing this, Pacific DMCs moved decisively to restrict international and domestic travel. These restrictions, combined with the introduction of physical distancing measures, helped Pacific DMCs contain the pandemic but negatively affected tourism and trade. Given the decline in tourism and trade, ADB projects an average economic contraction of 6.1% across all Pacific DMCs in 2020. Although most Pacific economies are expected to start recovering in 2021, their economic performance is not likely to recover to pre-COVID-19 levels in the short-term because of uncertainties related to the pandemic and its anticipated prolonged impact on businesses and employment levels.
MSMEs have been particularly impacted across Pacific DMCs and lack the financial capability to withstand the effects of a prolonged economic downturn. They are critical to employment and livelihoods but lack the capacity to diversify or consolidate operations. In Asia and the Pacific, MSMEs generate 42% of economic activity, and their closures will have a long-term impact on economic outputs and employment. About 89% of businesses in Pacific DMCs, most of which are MSMEs, reported adverse effects from the pandemic, and 91% faced reduced revenues. The economic disruption caused by the pandemic has also affected access by MSMEs to supply chains and markets. By August 2020, 31% of businesses had closed (30% temporarily and 1% permanently), and 36% reported a partial reduction in operations.
With support from development partners, most Pacific DMCs have provided immediate financial support to MSMEs to respond to the pandemic. While the designated MSME agencies in respective Pacific DMCs have supported their governments in implementing these support measures, they acknowledged lacking capacity and tools to prepare for, and support, the post-pandemic recovery of MSMEs. Apart from the short-term recovery, most Pacific DMCs need to enable the legal and regulatory environment to support the operations of MSMEs. Inefficiencies in the regulatory and administrative procedures, including complicated tax administration, have resulted in high costs to start, operate, and close businesses. COVID-19 is changing business dynamics, and designated agencies have identified the need to review and adjust legislation to suit MSMEs' needs in the post-pandemic period. Many Pacific DMCs have supported MSMEs, including those in the informal sector, through programs under respective ministerial plans and specific sector policies. However, these programs are not integrated at the national level to support the formalization and development of MSMEs, and most MSMEs continues to operate as informal enterprises. The informality of MSMEs has limited their access to broader entrepreneurial support, development programs, and financing. Inadequate data on MSMEs has also been identified as a significant challenge in Pacific DMCs. Supporting MSMEs in a manner that extends beyond recovery and gives them incentives to formalize require structured government support that accelerates needed reforms to create an enabling business environment.
MSMEs in the Pacific have limited preparedness for a protracted economic downturn and lack business capabilities necessary to adapt the environment created by the pandemic. It has also accentuated their access to finance by stressing the income levels of MSMEs. The pandemic disproportionately affected women-owned businesses. MSMEs owned by women operate under the same regulatory, institutional, and pandemic-related conditions as those owned by men. Still, they must overcome additional gender-specific barriers to cope with disruptions caused by COVID-19.
|Impact||Recovery of COVID-19-affected MSMEs sustained and their vulnerability to prolonged economic downturn reduced|
|Description of Outcome||Capability of MSMEs to recover from the effects of the COVID-19 pandemic and grow in the post-pandemic period improved|
|Progress Toward Outcome|
|Description of Project Outputs||
Enabling environment for recovery and development of micro, small, and medium-sized enterprises strengthened
Micro, small, and medium-sized enterprises access to business development services and finance improved
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Geographical Location||Cook Islands - Nation-wide; Fiji - Nation-wide; Samoa - Nation-wide; Solomon Islands - Nation-wide; Tonga - Nation-wide; Vanuatu - Nation-wide|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
Consultants: To be selected and engaged by ADB
QCBS (80:20) - Firm (70 person-months international, and 100 person-months national consultant services) $2.20 million
Individual selection- National Project Support Consultant (30 person-months) $0.35 million
|Responsible ADB Officer||Bharat, Vimlesh Vikash|
|Responsible ADB Department||Pacific Department|
|Responsible ADB Division||Pacific Liaison and Coordination Office in Sydney, Australia|
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines
|Concept Clearance||01 Apr 2022|
|Fact Finding||15 May 2020 to 22 May 2020|
|Approval||17 Dec 2020|
|Last Review Mission||-|
|Last PDS Update||04 Feb 2021|
|Approval||Signing Date||Effectivity Date||Closing|
|17 Dec 2020||-||17 Dec 2020||31 Dec 2024||-||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|3,000,000.00||0.00||0.00||0.00||0.00||0.00||3,000,000.00||07 Sep 2021||190,276.00|
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|Title||Document Type||Document Date|
|Supporting Recovery by Micro, Small, and Medium-Sized Enterprises in the Pacific from the Effects of the COVID-19 Pandemic: Technical Assistance Report||Technical Assistance Reports||Dec 2020|
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|Contract Title||Approval Number||Contract Date||Contractor||Contractor Address||Executing Agency||Contract Description||Total Contract Amount (US$)||Contract Amount Financed by ADB (US$)|
|KSTA||Technical Assistance 6686||09 Jul 2021||DT Global New Zealand Limited||C/- Level 8, Aig Building, 41 Shortland Street Auckland, New Zealand 1010 New Zealand||Asian Development Bank||2499664|
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