The refugee business is focusing on the recovery from COVID-19 in Turkey
COVID-19 has significantly affected small and medium-sized enterprises (SMEs) worldwide, including SMEs in Turkey owned and employed by refugees. Over the past two years, they have faced government-imposed restrictions and disruptions on mobility, supply chain disruptions and a depressed demand. As Turkey enters a recovery phase, restrictions have been lifted and the number of COVID-19 cases has decreased, businesses continue to feel the effects of the pandemic and need to adapt to a new way of life with and after COVID-19.
For much of this time, Turkey has also faced comprehensive economic challenges. The country is struggling with rising unemployment and high youth unemployment, the high cost of living, the loss of the value of the Turkish currency and rising inflation. As the country faces challenges related to the ongoing pandemic recovery and volatile economic situation, small businesses, which account for more than 70% of employment in Turkey and contribute about 50% to GDP, are a key component of Turkey’s economic recovery, generating employment, stability and self-sustaining growth.
The Syrians brought their entrepreneurial skills and capital to Turkey, including the 2,800 companies in the construction markets, which employ an average of seven people, stressing the importance of sustainability and rebuilding the Syrian refugee business. In 2020, Building Markets conducted a randomized survey of SMEs in its business network in Turkey to better understand how the pandemic has affected Syrian entrepreneurs, finding that most companies are reporting significant revenue cuts and are in dire need of capital and other support (See: Impact of COVID-19 on Syrian business in Turkey). In early 2022, Building Markets surveyed the same companies to find out how they orient themselves in the current economic situation and to identify strategies to help them recover and increase their contribution to the Turkish economy (See: The Impact of COVID-19 on Syrian Business in Turkey: Navigating Recovery).
The results show that while SMEs in the construction market network have a more positive outlook as they focus on recovery from COVID-19 than earlier in the pandemic, they face new challenges given the economic crisis in Turkey. SMEs are experiencing the impact of inflation on rising prices, higher investment costs and the challenges of imports and exports. They address several needs, including access to digital training and tools, increasing public procurement capacity, improving sales and marketing, and access to finance and business loans.
The most significant obstacle for small and medium-sized enterprises today is the declining value of the Turkish lira. Although this study aims to understand the challenges posed by COVID-19 and facing SMEs as they navigate the recovery of the pandemic, 65% of companies said that the currency crisis has had a greater negative impact in the last 30 days. impact of the pandemic.
SMEs have a more positive business outlook in 2022. Overall, businesses have a more positive outlook for 2022 than for 2021, with nearly 60% of SMEs expecting higher profits and 55% expecting an increase in employment in the next six months. Over 70% of companies expect larger business investments this year compared to last year.
Access to immediate, flexible financing is a priority for SMEs. Despite their optimistic outlook, SMEs are limited in cash due to the current economic crisis in Turkey and the effects of the pandemic. At the same time, operating costs for SMEs are rising as a result of rising energy prices and hyperinflation. When asked to identify the most needed policies to support their business during the COVID-19 crisis, more than 30% of SMEs said they needed business loans. Despite significant government and international funding to support the SMEs affected by the pandemic, most SMEs said they did not know how to receive support.
The import and export of companies are negatively affected by the current economic situation. While the majority of SMEs surveyed do not import or export directly, of the more than 10% who import goods, the majority report that imports have been negatively affected by increased delivery costs and the value of the Turkish lira. Nearly 40% of SMEs have studied export products, with the majority of these companies reporting that their exports have been negatively affected by the current economic situation.
Many SMEs increased their digital capacity during the pandemic, but further digitalisation is needed. Most SMEs have regular access to the Internet and digital tools for doing business and use social media for digital marketing. Nearly 15% of the surveyed companies use an e-commerce platform, and over 20% of them use e-commerce during the pandemic. More than 60% of e-commerce companies have seen an increase in sales since the pandemic. Approximately 10% of SMEs accept digital payments, and 13% of these companies added the ability to meet customer requirements during COVID-19. Stakeholders interviewed for this study highlighted the current difficulty in pricing e-commerce products due to currency fluctuations and explained that SMEs lack flexibility in pricing compared to larger enterprises. They also shared the need for greater capacity building and training so that employers and employees can understand how to operate and market their goods and services through digital channels.
While Syrian SMEs face several unique challenges, they have also demonstrated their resilience, including their continued capacity to overcome difficulties, their continued economic participation and the outstanding contribution they can continue to make to the Turkish economy.
Building Markets gratefully acknowledges the gift of the United States government that made this study possible.