The Effect of Government Relief Measures on SME Employment and Survival in Burkina Faso during the COVID-19 Crisis

The economic impacts of the COVID-19 pandemic may be as important as its health impacts. In order to mitigate the effects of this crisis, governments around the world have set up temporary relief programmes in order to help firms maintain productive linkages with their clients, suppliers and employees. In this project, Joshua Deutschmann et al. study the impacts of the crisis on small- and medium-sized enterprises in Burkina Faso, one of the first countries in West Africa to report confirmed cases of COVID-19. The objectives of this project are twofold. First, to measure the contemporaneous effects of the crisis on SME operations and employment in Burkina Faso, building on baseline data collected before the crisis. Second, to conduct a field experiment in partnership with the Ministry of Employment to assess the impact of government relief measures on SME employment and survival.

To measure the impacts of the crisis, a phone survey of roughly 1,000 SMEs will be undertaken. The sample will build on existing PEDL-funded research from two co-investigators, Gansonre and Ouedraogo (project page can be found here) as well as incorporating pilot fieldwork conducted in 2019 supported by a PEDL capacity building grant. The Ministry of Employment has shared an additional firm list that will be used to increase the sample size and coverage to represent the economy of Burkina Faso. The researchers will analyse the short-run outcomes of sampled SMEs relying on the panel nature of the data, and will focus on quantifying differential effects by industry, gender of firm owner/manager, and gender of employees. After completion of the phone survey, a randomised experiment designed to help firms access government relief measures will be evaluated with firms randomly assigned to one of three groups: 1) control; 2) an information treatment; and 3) an information and assistance treatment. Firms in groups 2 and 3 will receive specific information about government measures intended to help firms that are affected by the crisis to recover, including information on how to apply. Additionally, firms in group 3 will receive direct assistance in completing the application process. Outcomes will be measured in a follow-up survey six months to a year later.

Given the urgent nature of the current crisis and the researchers' partnership with the Ministry of Employment, this project has the potential to directly inform policy in the country as the government takes additional steps to support firms and workers. More broadly, many countries are currently implementing or designing measures to address the impacts of the crisis on firms and individuals. The lessons from this project will have broad and immediate applicability for policymakers, particularly in low-income countries where it may be more difficult but nonetheless critical to improve access to relief for SMEs. This is especially important given that one of the greatest concerns of the crisis is the rise of unemployment. Further, governments may also face revenue shortfalls in the coming months and years and so understanding how to improve the effectiveness of these policies could be key to stretching limited budgets

Authors

Joshua Deutschmann

University of Wisconsin - Madison

Soumaila Gansonre

University Joseph Ki-Zerbo

Louise Guillouet

Columbia University

Aristide S. Ouédraogo

Université de Ouahigouya