The Covid-19 pandemic has been a great economic challenge for the Dominican Republic. Due to Government regulations, many businesses around the island have been forced to close their doors and thereby assume all the economic and psychological consequences that these ordinances entail.
With the intention of maintaining the nationwide curfew, avoiding a lack of control in cases of COVID-19 infections and the subsequent collapse of the Dominican health system, as well as continuing with a severe economic decrease, Ex-President Danilo Medina and current President Luis Abinader had and have maintained a state of emergency for several months now. A failure to follow the curfew will most likely turn out in arrest and/or fines. But how exactly has this rebounded the population, and more specifically, Small and Medium enterprises?
The current curfew has now been recently changed by the Government to the following:
January 11-26 (M-F): Curfew from 5pm to 5am, with a grace period for transit until 8pm each day.
January 11-26 (Sa-Sun): Curfew from 12pm to 5am, with a grace period for transit until 3pm each day.
We usually associate fun with the night due to normal working hours, but this has not always been the case. In the Dominican Republic, there is a culture of fun associated with “the later the better” thus it is more logical for people to be gathered the most at night— hence the curfew being past evening and during nighttime.
Almost ever since the pandemic hit the country, this relatively strict— but periodically fluctuating— curfew has created numerous difficulties for industrial companies and imposed pressure on the logistics distribution chain, a saturation of people in banks, supermarkets, and service centers due to reduced hours, in addition to distorting the smooth running economic activity of Small and Medium-sized Enterprises (SMEs). Many economists and politicians believe that it is greatly necessary to allow the opening of night-operation SMEs and for the Government to establish the appropriate protocols for when leisure and entertainment companies start their operations and thus avoid a considerable increase of Covid-19 cases.
The UNDP, MICM, Princeton University, and the Vice Presidency of the DR organized
a survey directed to the said sector, of which the MIPYMES Observatory additionally collaborated in the processing and analysis of the resulting data. In terms of operations, 74% of the SMEs surveyed reported that they had to close their businesses completely due to the pandemic, while 20% indicated that they have partially ceased operations. A large part of these companies belong to the formal sector, and 52% of them indicated that they believe they will have to lay off one or more employees in the next 2 months. As the main needs of SMEs, the survey showed that financing is found through loans (56% of respondents), purchase of inputs for production (14%), and use of digital media (13%).
Naturally, these SMEs have been the productive segment hit the hardest by the pandemic, since they have productive structures with a higher level of economic vulnerability compared to large companies, low resilience capacity, little room for action to be able to carry out contingency, and, in the case of a significant proportion, low levels of digitization, which prevents them from converting their production processes to alternative forms such as teleworking and electronic commerce.
There is no doubt that these SMEs will have a hard time recovering from the economic and psychological effects that this pandemic has brought upon them. Some already do, and some are yet to harshly go through it sometime soon. While the Government, already struggling to maintain all economic sectors on foot, has repeatedly tried to relieve these enterprises from the unpleasant aftermath by applying diverse measures, it has been difficult for them as a whole to keep up with all of the distress Covid-19 has resulted in, not only for the Government but for the entire country.