The novel coronavirus disease (COVID-19) shocked global, regional, and national economies. People’s daily lives and mobility have been strictly limited to safeguard their health and control the virus spread. Travel bans, temporary closures of schools and businesses, and social distancing have accompanied quarantines. Private businesses have cut back production and service delivery. They have been forced to temporarily lay off employees and face a lack of working capital, making it difficult to continue operating. Prolonged containment of COVID-19 increases the risk of business failure and bankruptcy. In particular, micro, small, and medium-sized enterprises (MSMEs) that for example in Indonesia, they are around 64 million business units and equivalent to 99.99% of all business entities.
ADB November 2020, reporting that in Indonesia, around half (48.6%) of MSMEs temporarily closed their business shortly after the virus outbreak, more pronounced in microenterprises (48.0%) and small firms (54.4%). The remaining half continued to operate, but faced supply disruptions with low demand, quickly slowing business activity, especially in medium-sized firms. An immediate drop in demand was reported by 43.8% of medium-sized firms, 37.5% experienced delays in delivery of their products and services, production or supply chain disruptions, and contract cancellations. In Lao PDR, Philippines and Thailand around 30% to 70% of MSMEs were also temporarily closed their business impacted by the pandemic. For sure, these problems not only happened in Asia but also around the world especially in developing countries which socio-economic safety net systems are still limited.
Unfortunately, the situation will be more severe when we are also considering the global climate change. The MSMEs are the most vulnerable sectors to be impacted by climate change like the pandemic Covid-19, even worst and permanent. If the global temperature increases mora than 2 degree Celsius compared to pre-industrial level, it would be a huge disaster of the world. Poverty and climate migration will be everywhere.
We should transform the MSMEs as part of the solution, not part of the problem. If not, there will be a tendency for them to return to activities that damage the environment such as forest encroachment, illegal mining, and other illegal activities that can increase the risk of climate crisis and unsustainable life. As a social enterprise institution with more than 50 years experiences, Bina Swadaya has involved to various activities to provide assistance in agriculture sector, fisheries and agritourism which reduce poverty and support climate change adaptation. Some local governments work with CSO and private sector also have made the best effort to improve community’s income and environmental sustainability.
A green economy needs to be developed to reduce poverty, sustainability ecosystem and be adaptive to climate change through division of role among stake holder by providing infrastructure facilities (irrigation, dams, small port) using the IOT that can be accessed easily by farmer and fishermen, providing agricultural and fisheries facilities that are adaptive to climate change (ship with sensor air, pest control, adaptive seed etc), strengthening local traditions and culture (social capital) in climate change adaptation, capacity building for farmer and fishermen in community learning center, and financing and insurance for agriculture fisheries, and others micro enterprise to reduce the risk people becoming poor due to business failure caused by climate change.
There are also some proposed agenda actions: 1) Build the social enterprises cluster on climate change, esp. in local government level, to strengthen the people’s capability to improve their endurance and resilience toward any unprecedented risks and calamities due to climate change and climate variability. 2) Create mechanism for public, esp. small enterprise, to participate in the decision, implementation and monitoring of Climate Change action.
Related to financing there are also some proposed activity agendas: 1) Initiate sustainable financing scheme for small enterprise to face/adapt with climate change & climate variability, 2) Providing climate change impact insurance for small enterprise, when their business collapse due to climate related disaster, 3) support institutional strengthening of self-help groups created by micro and small businesses to be more resilient in the face of climate change shocks.
In developing awareness and knowledge, some details actions proposal: 1) strengthening local traditions and culture (social capital) in climate change adaptation, 2) education for people, especially small enterprises, by providing climate service directly to enable them anticipate better and make decisions accordingly towards the increasing climate variability, 3) innovation support and development of appropriate technology in climate adaptation for small businesses
However, doing local is necessary but insufficient. A global cooperation is needed as we live in the same planet. G20 is one of the most appropriate institutions to take the leadership by applying multi-stakeholder approach. Quoting Wikipedia, G20 is composed of most of the world’s largest economies, including both industrialized and developing nations, and accounts for around 90% of gross world product, 75–80% of international trade, two-thirds of the global population, and roughly half the world’s land area.
A code red for humanity is real and now is the time. Humanity is at stake. We need a long-term commitment that matched by immediate actions in the decade of transformation, that people and planet so desperately need. No country can survive alone and it needs collaboration of all stakeholders to do global collective actions.
Asia small and Medium-Sized Enterprise monitor 2020, volume II-COVID Impact on Micro, small and Medium sized enterprise in Developig Asia, Asia Deveopment Bank, November 2020.
The Role of Government Institutions in Climate Resilience, Book 3, BAPPENAS, the Ministry of National Development Planning, Republic of Indonesia, 2021