The lag behind micro and small businesses goes beyond covid

The lag faced by micro, small and medium enterprises in Panama is not only the result of the health crisis resulting from the covid-19 pandemic, external and internal factors affect their performance, many of which are shared at the Latin American level. highlights the report on Ibero-American Observatory MiPyME 2023where Panama participated.

He the president of the National Union of Small and Medium Enterprises (Umpyme), Franklin Martínez, is explicit in expressing how exposed small businesses are to the economic fluctuations as well as the social and political crises the country faced before, during and after the pandemic.

The above gains strength in the study of characterization of microenterprises in Panama, which define the intention of the undertaking, which it represents Ibero-American Observatory MiPyME 2023.

In this sense, the high price of energy, political corruption, extortion or insecurity of citizens were mentioned by MSME interviewed in Panama Oeste as the main external factors influencing its development. Furthermore, high informality MSME and its development is affected by insufficient regional or national logistics infrastructure.

At the same time, the internal factors that have the greatest weight and that disrupt its organizational stability, which these units indicate, is, first of all, the deficit of resources and technological processes of the company, in accordance with what is generally measured in the country. and also in Latin America.

Another problem that unites provincial, national and Ibero-American opinions is the quality of products or services, problems in accessing international markets, lack of resources and technological processes of the company, poorly qualified company personnel and late payments.

They also refer to weak business culture, problems related to product, service, process and management innovation, low degree of digitalization in the company, problems related to the logistics chain, cyber security in the company, high costs related to sustainability measures. (carbon footprint, waste); as well as difficulties for the generational transfer of the company.

Micro, small and medium enterprises represent more than 80% of companies that contribute to the national economy, they are the engine of the economy, and the covid-19 pandemic hit 40% of this sector, which went bankrupt as a result. paralysis of economic activities in 2019 – 2020, explained the president of the National Union of Small and Medium Enterprises (Umpyme).

This fabric has been cracked by the situations recorded in recent years.

He impact of covid-19 It was devastating to Panama’s micro-business sector, destroying 6,061 units, 18.7% of employment and eliminating at least $64,000 in benefits; already provided by organizations such as ECLAC, ILO and EGADE As a result of the adoption of restrictive measures, the study highlights: The effects of covid-19 on microenterprises in Panama by Professor Reyes Arturo Valverde Batista from the University of Panama.

Retail micro-enterprises were the most affected when lockdown measures were imposed in Panama.

Umpyme cited 10% of this business structure as affected by road closures in June 2022, a figure that could be exceeded after more than 30 days of closures due to the denial of mining activity in Panama in October and November 2023.

The union also pointed to the lack of microcredit banking entities and specific programs for the sector, which limits the good business of the sector. Micro-entrepreneurs must meet the same conditions as large companies in order to be able to access a bank loan, he pointed out.

In his analysis, economic researcher Reyes Valverde refers to micro, small and medium enterprises that revolve around the activities of the tertiary sector as a result of not finding a job on the labor market. The business structure consists of 80% micro and small enterprises, 55.3% economic units intended for trade, 40.4% oriented to various types of services and only 4.3% to primary and secondary production activities.

Considering this reality, representatives of MSMEs interviewed in Ibero-American Observatory MiPyME 2023 They propose actions to improve competitiveness in the area where these agents operate, the first of which is to increase aid for investments, a need shared by other actors in the country and in Latin America.

Likewise, they seek to facilitate greater connections between public actors, companies and universities; while MSME in the province Western Panama They believe that reducing taxes, that is, fiscal pressure, would increase competitiveness, a choice expressed in Latin America as well.