Introduction The world economy was hit hard by the outbreak of
affected by the onset of the pandemic. Such an
the Covid-19 pandemic (henceforth the pandemic)
investigation may allow us to draw conclusions
in early 2020. The pandemic has led to sudden
about the resilience of these firms in time of crisis.
changes in the business environment, resulting in
The paper is concerned with SMEs because they
critical challenges for many firms in most sectors
represent a very important socioeconomic pillar
and in many parts of the world. The impact of the
that contributes to the overall economic activity
pandemic on the wider economy was large and no
through producing goods and services, generating
region was spared from the dire consequences of
jobs, and reinforcing economic competitiveness
arguably the worst health crisis in over a century.
(Eggers 2020). In addition, SMEs are considered the
The economic contagion of the pandemic was
backbone of many MENA economies. For this
broad and its spillovers were large, affecting the
purpose, we employ a recent enterprise survey of
demand and supply sides, and the real and
representative samples of SMEs from Jordan,
nominal
and
Tunisia, Morocco, and Egypt, all of which are non-
internationally. Therefore, the pandemic presented
oil-exporting and middle-income countries. The
the firms with insurmountable challenges (Duarte
survey takes a snapshot of the SMEs just before the
Alonso et al. 2020).
pandemic hit and follows them after the event. The
economies,
both
domestically
data set includes information on many firm
It is expected that developing countries are
characteristics such as the size of workforce,
disproportionately more affected by the crisis. This
participation in international trade, ownership,
is due to the fragile economic structures and
sales, investment, adaptation, and participation in
institutions in many developing countries, which
government assistance programs, among others.
makes it more difficult to deal with crises. For
The data obtained from the survey allows us to
example, many countries do not have resilient
compare firm outcomes after the pandemic first
health systems capable of dealing with the influx of
started (in Feb 2020) to pre-pandemic levels. We
a large number of people that may simultaneously
are also able to estimate difference-in-difference
become sick. On the other hand, governments may
equations to compare the effects of the pandemic
not have the expertise and/or resources to manage
the
crisis
and
mitigate
the
on firms that were able to work remotely, receive
worst
government
economic (and health) consequences for both
assistance,
or
participate
in
international trade versus their counterparts that
citizens and businesses. The countries of the MENA
do not do these things.
(Middle East and North Africa) region, especially the non-oil-exporting ones among them, similarly
We find that firms largely resorted to reducing
observed deteriorating economic conditions. It is
wages and hours of work instead of outright layoffs
expected that businesses in the MENA observed
to deal with the negative consequences of the
negative effects from the pandemic but it is not
pandemic. As expected, we find that some MENA
clear what these effects are. This paper aims to
SMEs were forced to (temporarily) close their
explore how firms - particularly the SMEs (small and
business at some point during the pandemic, but
medium-sized enterprises) - in the MENA region
the majority of firms adapt their business models
have been affected by the ongoing pandemic, and
to deal with closures and lock-downs. In addition,
how they adapted to its challenges. Namely, we are
the SMEs expect significantly lower sales and
interested in how SME outcomes that include labor,
investment levels in 2021 compared to 2019 levels,
wages, status, capacity to adapt, and revenues are
but there is clear evidence of recovery in Q2 versus 5
