Abstract:
The COVID-19 outbreak came as an unprecedented health crisis cross the globe but had later
taken a different form as an economic crisis. In an attempt to curb the spread of the virus,
after it was declared to be a pandemic by WHO in March 2020, governments implemented
policy measures which included among others: lockdowns, social distancing and quarantines,
cancellation of international flights, movement restrictions, prohibition of people gatherings
and closure of some key institutions. The policies presented positive results in containing the
situation; however, they came with adverse effects on all businesses, particularly the SMEs.
Lesotho’s SMEs account for the majority of the private sector and are inevitable national
economic growth, sustainable development, and job creation. SMEs are commendable for
their ability to create employment to the low skilled labour force, particularly the youth who
are unable to find employment in the formal sector. They are easy to start with less
complicated organisational structures, as a result they are considered vital instruments for
poverty alleviation, reaching out the most vulnerable society in the rural landscapes.
However, the SMEs sector has been disproportionately affected by the disruptions in supply
chains, the closure of borders, the continued lockdowns and the declines in aggregate demand
all attributed to the outbreak of COVID-19.
The impact of COVID-19 experienced on the performance of SMEs showed declines in
demand and delays in supply of the SMEs’ products and inputs respectively, accompanied by
reductions in working hours. The total turnover also experienced an uncontrollable drop
down, owing to declines in sales and cash flows. The effects of COVID-19 on employment of
SMEs displayed escalated job losses and reduction in salaries which were all responsible for
deterioration in the living standards of SMEs workers who relied entirely on income obtained
from these enterprises. The dire effects of COVID-19 call for effective government
intervention to boost the SMEs to a speedy recovery.
