Conclusion
Adjustments made and assistance received
How family provided for needs during enhanced community quarantine. To be able to provide for their family during the ECQ, 38 percent of the sample households, as a primary answer, said they either got another job or tapped into other sources of income (such as pension), 27 percent said they spent less, and another 27 percent said they borrowed money.
Receipt of aid. Of all sample households, 89 percent said they received some form of aid during the ECQ, and 11 percent said they did not receive any aid at all. For those who received some form of aid, when asked what kind of aid they received, as a primary answer 73 percent said relief goods (typically rice and canned goods), 17 percent said cash aid from government (DSWD other than 4Ps, DOLE, SSS, LGU, etc.), 9 percent said 4Ps, and one percent said cash aid from other source (relatives, employer, etc.).
Adjustment in livelihood. When asked what adjustments they made to their livelihood during the ECQ, as a primary answer 23 percent said they closed operations, 19 percent said they cut operating hours, 4 percent said they changed livelihood, 4 percent said they added other sources of income, and 2 percent said they temporarily laid off workers.
Household and enterprise recovery needs
Amount of capital needed. When asked how much capital they would need to bring their families out of their predicament and back to their pre-ECQ condition, 39 percent said they would need P10,000 or less, 34 percent said they would need more than P10,000 but less than P20,000, 25 percent said they would need more than P20,000. Overall, the amount of capital the household enterprises said they would need is quite small, possibly reflecting the amount of loans they have historically received from microfinance institutions rather than their actual needs. This merits further examination possibly through a follow-up survey.
Where to source capital. Most of the respondents (86 percent) said they would source capital from borrowing. A much smaller 12 percent said they would use their savings and 3 percent said they would try to get capital from other sources.
Primary hurdles. When asked what they see as the primary hurdle to maintaining their business post-ECQ, close to three-fourths (74 percent) of the sample households said a decline in sales, 14 percent said a stoppage of production or supply, another 9 percent said lack of capital, and 2 percent said loan and bill payments.
Support needed post-ECQ. When asked what kind of support they will need after the ECQ, as a primary answer 36 percent said they would need a loan at a lower interest rate, another 8 percent said they would need a loan at the same interest rate but for a longer term, 10 percent they would need to restructure or re-schedule their current loan, and 42 percent said they would need to withdraw their savings, including from the microfinance institutions.
LGU registration and access to e-payment
LGU registration. Access to e-payment. Close to one-fifth (19 percent) of respondents said their households were not using any money transfer service. A third of respondents said they did not have any member in their households registered in any LGU office.
Disproportionate effect on lowest-income microenterprises
Statistical analysis using logistic regression, show those earning the lowest income level (P10,000 and below per month), even after controlling for region of residence, were significantly more likely to have experienced eating less than they wanted because of lack of food during the ECQ and significantly more likely to have experienced having no food at all at least
once during ECQ.
Recommendations
Given the limited economic activity, the most urgent response is direct support to households. For those in danger of hunger, especially, cash aid for basic food and nonfood needs should be provided. Immediate registration should be undertaken for households (and their enterprises) not registered in any local or national government office to prevent the re-occurrence of what happened when the Luzon ECQ was imposed and cash aid was tied to registration, and so many unregistered households either did not get aid or got them very late.
Expert advice should be provided the households, whether by an MFI or a government agency such as the Department Trade and Industry, in assessing the viability of their enterprise in the current environment and moving forward. The assessment will include whether to continue the enterprise or not, how to access new markets and supply sources, and whether and how to move to an alternative enterprise. Capacity building activities could be undertaken to support these enterprises where they are weak. Additionally, microenterprises should be provided a guide on business continuity planning to help them establish good occupational safety and health practices and manage potential business risks during the pandemic.
Marketing channels could also be developed in specific areas, such as ARMM and Region 6, where enterprises reported lower sales as primary concern.
Immediate enrollment in an e-payment system should be undertaken for households without access to such to facilitate cash aid and help households adjust their enterprises in the new normal. Training in the use of digital platform for online commerce should also be provided the households.
Soft loans, in the form of lower interest rates or a longer loan term, should be made available to viable microenterprises to help them in their recovery. A reasonable restructuring or re-scheduling of current loans will also help microenterprises. Both of these imply that financial support should be provided to MFIs who are often the primary or the only source of loans for microenterprises.
[1] This is a condensed version of Ducanes, G., L. Lanzona, and P. Tuaño. 2020. The Impact of Covid-19 and the ECQ on Low-income Households in Microenterprises: analysis of the ASA Philippines Client Survey. Ateneo de Manila University Department of Economics and Ateneo Center for Economic Research and Development Policy Brief 2020-23. https://ateneo.edu/sites/default/files/downloadable-files/Policy%20Brief%202020-23.pdf
Ducanes is a Associate Professor, Ateneo de Manila University Department of Economics. E-mail: gducanes@ateneo.edu
Lanzona is a Professor, Ateneo de Manila University Department of Economics. E-mail: llanzona@ateneo.edu
Tuaño is a Associate Professor and Department Chair, Ateneo de Manila University Department of Economics. E-mail: ptuano@ateneo.edu
Image credits: Nonie Reyes