What will it take for the micro-entrepreneurial ecosystem to survive the crisis that has been amplified by COVID-19?

COVID-19 has turned the world upside for India’s 69 million MSMEs. Experts from SEWA, Deshpande Foundation, deAsra Foundation and others deep dive into the micro and macro challenges, and how microentrepreneurs and collectives are tapping into the opportunities that have taken roots in the crisis.

What will it take for the micro-entrepreneurial ecosystem to survive the crisis that has been amplified by COVID-19?

Wednesday April 22, 2020,

9 min Read

Recently in a media interview, Ravi Venkatesan, chairman, Global Alliance for Mass Entrepreneurship (GAME), India's first national-level organisation pioneering the movement of mass entrepreneurship in the country, pointed out the enormity of possible disruption in the million micro, small and medium enterprise (MSME) sector due to COVID-19. He said, “It is likely that more than one fourth of India’s 69 million MSMEs could shut shop if the nation-wide lockdown were to extend beyond eight weeks.” A possibility that has been reiterated by experts in the sector time and again.

Why the current crisis is a double-edged sword

Once considered the backbone of India’s economy, the MSME sector is now hustling hard to survive and thrive. Today, microentrepreneurs have no option but to look at doing things differently, repurposing their business models or adopting a new one. Many experts and organisations working closely in the sector say, that this is as much an opportunity as it is a challenge. Organisations that are working with microentrepreneurs are innovating and pivoting in these tough conditions. They are showing that it is possible to mitigate the risks even amidst the vulnerability. But, this in no way negates the challenge at hand which is real, big and continues to pose a threat.

Throwing light on the reality and gravity of the challenge, and how microentrepreneurs are insulating themselves from the long, medium and short term challenges brought about by COVID-19 on the market, the solutions that are working for them and the significance of collectives, were seasoned experts from some of India’s more renowned and respected grassroots organisations and collectives.

At the panel discussion on the topic of ‘Support mass entrepreneurs to survive’, Reema Nanavaty, Executive Director, Self-Employed Women's Association (SEWA); Raghunathan Narayanan, Founder and Chief Mentor Vrutti -Livelihood Impact Partners; Krishnagopal GV, CEO, Access Livelihoods Consulting India; Vivek Pawar, CEO & Trustee Deshpande Foundation India; Pradnya Godbole, CEO, deAsra Foundation; and Baskar S Reddy, Executive Director at Syngenta Foundation India shared a detailed account of the challenges faced by the micropreneurs they closely work with, how are working on addressing them and perspectives on the road ahead as an ecosystem. Moderated by Madan Padaki, Co-founder, GAME, the panel was part of the day-long webinar hosted by GAME on April 13.


The complexities of micro and macro challenges

“A lot of schemes that have been rolled out by the government, banks and other ecosystem players. But there isn't one place to access all this information. This is turning out to be a big challenge for the microentrepreneurs, in addition to the evident cash crunch brought about the lockdown and the market downturn,” shared deAsra Foundation’s Pradnya Godbole.

She added that low levels of digital literacy among microentrepreneurs have turned out to be a major obstacle. “They are finding it difficult to adjust to the new way of doing business.” Pradnya’s account of the challenges set a firm ground for the discussion to lead through.

Reema Nanavaty from SEWA agreed with Pradnya and shared, “Digital literacy and having a strong command on digital knowhow is now becoming a must for these entrepreneurs.” She added that the lockdown and the sudden change in the market dynamics has drastically affected those in the textile and garment industry as well as those entrepreneurs or enterprises whose supply chain was dependent on the urban market.

If there was one underlying theme expressed by the panelists it was that the world had come crashing down for the tiny and the microentrepreneurs who were struggling to stand on their feet and trying to come into the mainstream market.

“Their world has turned upside down,” stated Vivek Pawar.

Explaining why, “It took many years or months of efforts for many to understand what product they want to sell, what market they want to cater to, how to price the product, how to sell it. And, suddenly, because of COVID-19, all these learnings and effort have become irrelevant. Most of their products are no longer in demand. They cannot sell sitting at home. They don’t know what products are required now. They don’t know what competencies are required.”

Krishnagopal GV, from Access Livelihoods Consulting India, then delved deeper into the macro challenges that collectives and enterprises that worked with micro entrepreneurial ecosystem was facing.

“At a collective level, the challenges are much more complex. The questions that we are trying to address is how do we reach market, how do we reach customer directly, how do we address shortage of labour, among many other vital questions.”
Baskar S Reddy from Syngenta Foundation agreed and shared, “Minor technical challenges such as how do we make transport available, how do we get packaging materials, have now snowballed into major challenges. COVID-19 has amplied what was one minor hurdles to a major pain point today.”

Surviving the crisis

The experts pointed that microentrepreneurs will need to be proactive and take a long-term outlook of the crisis. They also shared how they have been working closely with their community of microentrepreneurs and ecosystem players to address the challenges and also tap into the opportunities that had taken roots in the crisis. Reema Nanavaty for instance highlighted how SEWA has been working closely with the local governments and panchayats to make way for their agribusiness company to sell their produce directly to the people at the bottomline - making it a win-win - both for consumers and the microentrepreneurs.

“In conversation with Panchayats, we have set up a small table at fair price shops where in our women microentrepreneurs can sell some of the agri produce which the government does not supply. And, with this arrangement, we have been able to see our sales jump up by at least three times.”

She also explained in detail, how seeing the opportunity for ready-made dry snacks, they have been able to mobilise their team of women quickly to cater to the market demand for baked goods. And, given the spurt in market demand, they are now working to put together e-modules and train more women and thereby enable more women microentrepreneurs leverage the market demand. Reema also stated that they have also worked together with the Municipal Corporations to supply fresh produce to the consumers directly while also engaging women to make soaps and masks, and thereby cater to local demands. “The many initiatives that we have implemented have been possible because of restructuring our supply chain. We focused on local production and distribution within a hundred mile radius to address challenges related to lockdown and travel restrictions.”

She added, “As an organisation that directly works with 1.7 million women, we had to start think right from the very first hour when the lockdown was announced as to what we needed to do to safeguard the livelihood of these women.”

Vivek shared how Deshpande Foundation is collaborating with a technology startup for a pilot project that is leveraging the existing gap in the supply-demand chain of essentials in rural areas as a livelihood opportunity for their ecosystem of microentrepreneurs. He shared, “The idea is to work on an idea, convert it into a pilot, make it successful and then scale.”

Krishnagopal also detailed how Access Livelihoods Consulting India has worked on a model to provide food security to the tribal villages by providing them with ration stocks that would last at least two months. He also added that through talks with the government, they have been able to seek relevant permission for their community of microentrepreneurs so that the business, especially for those in the production and processing units, can be run as usual, and thereby meet the market demands once the market situation begins improving.

For the deAsra Foundation, a lot of their COVID-19 response initiatives have been towards enabling microentrepreneurs in the urban areas to come to terms with the new normal brought about by the pandemic, and how they can find innovative ways to survive in the post phobic world.

“The new normal will require a different way of thinking. Social distancing will continue to be the new normal at least for a while. People are not going to be comfortable going to local retail stores, salons, juice shops or even small restaurants. And, many of these businesses aren’t online yet,” shared Pradnya.

Given this backdrop,the foundation has worked to educate its community of microentrepreneurs and gear up for the new normal. “We are helping them go online. We are helping them learn how they can leverage platforms like WhatsApp, Facebook or their own websites to sell their product or services. We are also helping them understand the importance of winning customer trust and loyalty because that will help them survive in the months to come. We are trying to see how these microentrepreneurs can sell gift cards and vouchers, which the customers can avail later but will help in keeping the cash flow running.”

If one were to look closely, one common factor that is today helping millions of microentrepreneurs in India battle the current crisis as well as helping them gear up for its aftermath is the effective role of grassroot organisations and federations.

As Reema rightly pointed out, “These organisations have played and continue to play a very critical role in ensuring that life doesn’t come to a standstill for microentrepreneurs. So, as much as it is important to look at the people who are most affected by the downturn, it is important to look at the role and significance of these organisations and how does one strengthen them.”

Coming soon: Experts share how liquidity and funding in these difficult times will help small businesses navigate through the tough times that lay ahead.