The West Africa Trade & Investment Hub received an additional $50 million in funds allocated specifically for COVID-19 relief in the region, with $36 million for co-investment grants directly with the private sector. With this additional funding, the Trade Hub will issue grants to support West African businesses affected by the coronavirus pandemic, with an emphasis on stabilizing supply chains, increasing access to financing, and job retention. We sat down with Michael Clements, the Chief of Party for the West Africa Trade & Investment Hub, and he shared his insights on COVID-19’s impact on West Africa’s private sector and how the Trade Hub can continue to catalyze economic growth despite severe disruptions.
Q: Based on your discussions with the private sector over the past few months, what have been the greatest impacts of COVID-19 on businesses operating in the region?
Michael: The greatest COVID-19 impacts on private sector companies that I talk with fall broadly into two categories. The major category is concerns about cashflow, first and foremost, which becomes even more challenging as each month goes by. The second category, especially for export-oriented firms, is that their customers will find other suppliers if they cannot meet existing customers’ demands when those customers are ready to start purchasing again. The concern is that ‘foreign demand’ will ramp up before ‘domestic supply’ is ready to start, and the timing of these things is critical for exporters.
Q: How does the Trade Hub plan to respond to these major issues?
Michael: We were very proactive by launching a survey in April to get a general baseline of sentiments amongst our business partners. One thing we learned, at that time, is that 68% of our respondents said that COVID-19 had not changed their intention to stay engaged with the Trade Hub and implement their growth and expansion projects as planned. The learnings from our survey, which we shared with USAID, and the continuing demand for the Trade Hub services and grants, strongly influenced USAID’s decision to award us a ceiling increase in August, specifically for COVID-19 grants. These grants will be our most powerful response to the pandemic. Interestingly, we repeated our COVID-19 survey in August, and the aforementioned percentage had grown to 86%. This tells us that the majority of our respondents are saying that a COVID-19 grant is now even more important to them for their business’s survival than it was five months ago.
Q: The Trade Hub’s vision is to be a catalyst for economic growth in West Africa. How has the project been able to maintain operations despite the difficulties caused by the pandemic?
Michael: We are very fortunate that the nature and mechanics of the Trade Hub program lend itself to remote working. Even before we started working from home, many of us spent more time in remote meetings than we did in a face to face meetings. So that way of working has simply continued for us. Arguably, it is more efficient and time-effective than face to face meetings.
Q: How can interested companies’ partner with the Trade Hub to respond to COVID-19? What are the selection criteria and how many companies are you considering for this support?
Michael: We have had considerable success in the first year of our operations at making ourselves and our services known to the private sector and potential investors across West Africa. We have established particularly strong bi-lateral relationships with USAID missions and USG initiatives (Prosper Africa, W-GDP, AGOA), all of whom are strongly connected to private sector operators in their respective countries and are aware of their investment requirements. Interested companies can contact us directly, through our website or social media platforms, through Creative Associates International in the U.S., through any USAID mission in West Africa, or through any of the Chambers of Commerce or other business associations we are working with.
We received 140 applications for the COVID-19 grants, of which we selected 62 for further evaluation. The requirements for selection, which were highlighted in the RFA, were that the concept being proposed by the applicant could demonstrably contribute to overcoming disruptions in export oriented supply chains, and / or support domestic food security issues and prevent loss of jobs, and / or would help to scale up the production and service capabilities of companies involved in COVID-19 responses on a case by case basis.
Q: During difficult times, marginalized groups such as women and youth are often the most impacted. How will the Trade Hub target these groups in this context?
Michael: The Trade Hub has a very strong Gender Inclusion Action Plan which we started implementing in Year 1. This work will continue and expand in Year 2 and beyond. We will also be announcing some specific initiatives for youth in Year 2. We strongly encourage women-led businesses and youth enterprises to approach us with their ideas for business growth and expansion projects, particularly if they offer opportunities for sustainable job creation.
Q: What advice would you give to businesses across the region as they confront a range of challenges caused by the pandemic?
Michael: Cash is king. Manage your cash flow very closely, but do not be afraid to take on short-term debt if it will help to keep your business alive. Stay in contact with your customers. Depending on your needs, don’t be afraid to sell a minority-stake of shares in your business, especially redeemable preference shares, if that will secure your cash requirements until the pandemic is over. History shows that it takes ten times more cost and effort to start a new business than it takes to keep an existing business alive, unless you fall too far into debt and simply can’t afford to service it.
Develop new business models that maximize your use of technology and remote working. Look after your workforce. They are your most valuable assets. SMEs should strongly consider whether it is worth your while to pay rent for premises, or whether you can save this money by changing to an online and remote go-to-market app.