Impact of COVID-19 on the wellbeing of micro and small entrepreneurs of rural Pakistan

Abstract

According to the constitution of Pakistan, the state is responsible for the provision of necessities of life to its citizens whenever their livelihood is permanently or temporarily threatened. COVID-19 and its associated lockdowns were a series of events where amenities of life around the world were seriously endangered. Especially, hard hit were the small- and medium-sized entrepreneurs (SMEs) of rural Pakistan. To quantitatively assess the social and economic impact of COVID-19, we interviewed the local microenterprise owners in rural Pakistan from January to February 2021 and then June 2021. Mean comparison tests were estimated for pre- and post-COVID-19 periods. Results reveal that the COVID-19 pandemic has significantly and negatively affected wellbeing of micro and small entrepreneurs in the regions as the income of most of the sampled entrepreneurs significantly decreased during the pandemic. Disaggregated consumption analysis however revealed that nominal consumption of food, clothing, energy, health, and education all increased, except for communication, during the pandemic. Furthermore, the regression analysis revealed that changes in income, occupation, borrowing during COVID-19, and family type of the respondents were significant factors in mitigating the effects of COVID-19. Based on the findings, policy recommendations are also spelled out in the last section.

Keywords: COVID-19 pandemic; Pakistan; household expenditures; micro and small businesses; social wellbeing.