Syrian SMEs in Times of COVID-19 Pandemic: Challenges, Adaptation, and Policy Measures

Abstract

SMEs constitute the backbone of the Syrian economy and have suffered manifold challenges due to the continuous Syrian war. COVID-19 added further pressures on Syrian SMEs and forced them to take certain adaptation strategies to survive. This paper aims to investigate the main challenges that face Syrian SMEs during the pandemic and illustrate how they respond to adversities that emerged from governmental intervention to control the spread of the virus. It also discusses the measures initiated by the government to support SMEs during the pandemic. Through interviewing persons from the Syrian SMEs’ ecosystem, we find that high interest rates on SMEs’ loans decline on demand as well as high inflation represent the main challenges. SMEs respond to these challenges by marketing products online, stock procurement, and strengthening connections with stakeholders. We recommend the Syrian authorities reduce lending rates and increase loan sizes available to SMEs to help them overcome the pandemic adversities. Innovative sources of funding, such as venture capital and equity partnerships, could reduce the funding costs of SMEs. Moreover, SMEs will immensely benefit from training in digital tools to enhance their expansion and survival opportunities. Furthermore, bazaars should be organized during the year to give SMEs the opportunity to gain continuous access to markets. In addition, incubation services should be revised, particularly to SMEs with great potential to grow, to create the suitable environment for them to scale and flourish.