Assessing the Impact of COVID-19 on Small-scale Manufacturing Establishments in Ethiopia

Evaluating the effects of COVID-19 on small-scale manufacturing establishments is important at least for two reasons. First, although the impact of COVID-19 on the aggregate economy is expected to be negative, small-scale manufacturing establishments are uniquely positioned to be hardest hit by measures taken to mitigate the spread of the virus. Second, small-scale establishments play a key role in job creation employing more than 2 million workers. In particular, they are a vital source of employment and livelihood for low-skilled women and low-income households. There are three specific objectives the project will target. First, to assess the impact of COVID-19 on small-scale manufacturing establishments' current business activity. Second, to identify the channels and characteristics that explain why some establishments are more severely affected by COVID-19. Lastly, to identify the differential employment impact of COVID-19 across Ethiopia's nine regions and two-city administrations. To answer the first research question, the researchers will survey 625 small-scale manufacturing establishments stratified by manufacturing group. This sample is drawn from the Ethiopia Central Statistics Authority's annual survey making it possible for the researchers to merge their data with previous rounds of the CSA annual survey to better answer the second and third research questions. Although the COVID-19 impact on the economy is expected to be large and negative, not all small-scale manufacturing establishments are likely to be affected equally. Establishments and industries differ in terms of dependence on national and international supply chains, import intensity and the kind of product they manufacture among many factors. There will therefore be considerable heterogeneity in impact of COVID-19, which is critical for policymakers to understand. The findings of this project will help policymakers make informed and targeted interventions to reduce the impact of the pandemic on firms across the manufacturing sector. The project will also deepen understanding around the consequences of COVID-19 on small-scale business more generally.