As noted by Achim Steiner, Administrator of the United Nations Development Program (UNDP) - “This pandemic is a health crisis. But not just a health crisis.” The crisis is also an economic crisis with a toll on the economy resulting in bankrupt businesses, lost jobs, diminished incomes, and the risk of rolling back the development gains accumulated over many years.
In Uzbekistan, small and medium enterprises (SMEs) were among the hardest hit. 80% of all individual enterprises were not able to continue their operations. Service and retail sales sectors suffered severely from the disruption to their business operations. The first signals of impact on ordinary people are already worrisome. The number of unemployed increased from 1.35 to 2 million in just three months. Vacancy announcements on one of the top advertisement platforms dropped by 75% overall, and by as much as 90% in the tourism, restaurants and education sectors compared with the same period of the previous year. Considering that the size of the informal economy in Uzbekistan is between 40-50% of GDP, the scale of the economic impact is estimated to be even more serious.
Just as COVID-19 restrictions were imposed, our Accelerator Lab joined the Tasks Force established within UNDP Country Office in Uzbekistan to develop a package of support measures. We considered various ways to help businesses to weather the crisis – including pay-in-advance mechanisms to support small enterprises, tools for quickly switching to online sales, and reprofiling to other business areas. Several discussions with SME representatives showed that there was a need for quick, actionable solutions.
'Mappings IT based solutions during the COVID-19 Online IT Challenge 2020'
The COVID-19 IT Challenge 2020, launched in April, was our call for innovative solutions to tackle various aspects of the crisis and provide a platform for their further development. We used the challenge to map solutions and find partners who could offer support to small businesses during the crisis. We discovered that there was already a plethora of local offers that could help businesses, including services to transfer business to online platforms, pay-in-advance mechanisms and entrepreneurial skill-building platforms.
We learned that technological aspects were only secondary when it comes to supporting businesses in crisis. It was relatively easy for companies to find and adopt technology-based solutions that were in supply. The primary challenge was unpreparedness of the business owners to the crisis of this scale and lack of necessary soft skills, including establishing trust and a strong business-client relationship with clients.
The companies which had already built up robust client relationships and established an active online presence before the pandemic were the ones who were able to adapt and keep afloat. For example, we spoke with a textile producer who maintained a website, a Facebook page, and a Telegram group, in addition to their physical shop. During the lockdown, the company closed the store and moved to 100% online sales without losing sight of the regular clients. In this way, some of the businesses could quickly re-orient their business operations to the realities. Similarly, bakeries, cafes, sewing shops, training centers, and other businesses were able to continue their operations and retain their staff- even hiring additional staff on occasion- by expanding their online services and deliveries. In contrast, the businesses that relied on foot traffic and one-time clients without client engagement beyond this suffered from plummeting sales and potential closure.
Support to businesses
Considering the abundance of technological solutions already offered, we decided to concentrate on the other side of this challenge – developing necessary skills to weather this crisis. We concluded that the focus should be on providing SMEs with advice and consultancies on how to run a business in such a crisis, and how to effectively take advantage of the stimulation packages provided by the government to support them.
Two service lines – Online Business Clinic and Integrated Business Development - were developed and packaged as part of UNDP COVID rapid response measure in cooperation with the Chamber of Commerce and Industry of Uzbekistan.
The Business Clinic provides free business and legal advice to businesses affected by the pandemic through a series of live webinars which are broadcasted using a local webinar provider (Camon.uz) hosted on local network domains (TAS-IX); this makes accessing them free of charge, quick and reliable. At the same time, webinars and presentations are recorded and posted on YouTube, Telegram, and Facebook. A Q&A section in the Telegram channel responds to the most frequent questions about improving client relationships, retail sales, switching to another business opportunity, obtaining or repaying bank loans, organizing export operations, space rent, tax deferral, and many more issues that have taken on new and important dimensions through the crisis period. Currently this Telegram Channel has over 2,000 regular subscribers with a daily reach of around 5,200 people and an engagement rate (ERR) above 80%.
An Integrated Business Support Service is a more comprehensive support to businesses, which aims at improving the resilience of business through development of skills, business coaching and financial support. In developing the solution, we worked separately with a diverse group of people from UNDP and businesses community by applying the collective intelligence design methods. Moreover, analysis of the experience of UNDP in supporting livelihoods and entrepreneurship development in Uzbekistan as well as feedback of businesses, which participated at such programs, helped us to synthesize the initiative. This initiative is now being implemented in cooperation with Chamber of Commerce and Industry with financial support by Japan.
Here also, we have learned that a critical element of the business resilience during the crisis was the support by the local communities. Some groups were motivated to support small businesses in their neighborhood or social groups during the pandemic. Solidarity proved to be possible only if there was clear communication and public trust. This also tells us that more united and integrated local communities are better positioned to withstand these challenges. This is not an outcome of solo actions by business but also require local community integration initiatives by local authorities and community groups.
Support from businesses
With its agility, resourcefulness, and outreach, the private sector can also play a critical role in supporting the most vulnerable groups affected the crisis. We have seen businesses react in a matter of days at the grassroot level without any top-down guidance. In Uzbekistan, several entrepreneurs launched a fund called the Business Generosity Fund which donated food, hygiene products, and other necessities to large families, people with disabilities, the elderly people, single-parent families and people who have lost their income. For example, within the first two months of the lockdown, the Business Generosity Fund of Namangan City, one of the largest cities in Uzbekistan, helped over 20,000 families. Since the fund was set up by local entrepreneurs, they had a strong local network in place and access to the most reliable information about people in need of support.
‘Business people are heading to deliver food to vulnerable families’
As these separate grassroots initiatives took off, the government recognized their effectiveness and launched an initiative to consolidate them into a nationwide movement, the Generosity and Support Charity Fund. The government committed itself to establishing support centers in each region of Uzbekistan with a phone hotline to process requests for assistance from the local population.
However, these Help Centers were organized very quickly, which meant that if the situation deteriorated, and the number of requests increased significantly, the manual data processing methods used in the centers would be unable to keep up.
Being in close contact with our government partners, we have caught this signal and approached several IT companies for practical solutions. One Uzbekistan company, DataSite Technology, immediately responded to our request and offered to assist on a pro-bono basis, including adapting its existing enterprise resource planning (ERP) platform (kpi.com) to aid in digitalizing the work of the Help Centers. Our lab then facilitated a partnership between the ICT Development Center of the Namangan Region Municipality and DataSite to digitalize the process of receiving, processing, and monitoring assistance requests received through the hotline. We worked with the company experts examined the existing workflow, critical data needed for making decision and reporting, then quickly developed an online form for registering requests and enhanced it with new data categories in order to be able to generate near real-time reporting and actionable insights from data. Our partner quickly fine-tuned the existing platform and conducted training for the Help Center operators. Together, this successful collaboration enabled faster registration and response times for the important requests the Help Center received.
‘Help Center operators use the web-based platform to process the calls for assistance in Namangan City’
From April 9th to May 21st, more than 15,000 of these applications were processed through the new web-based platform. Later, this solution was also adopted by Namangan City’s Business Generosity Fund.
Our key takeaway from this case was that with necessary impetus the government and the private sector can harmonically complement each other by serving as equally important parts of a larger puzzle. Response time is pivotal in crisis management and Uzbekistan’s private sector has shown it can play a critical role in catalyzing or strengthening the COVID-19 crisis response. The government took up and scaled up the solutions for a much larger reach.
Big bet on private sector
These selected cases demonstrate how the private sector has emerged as important collaborator in responding to the COVID-19 crisis in Uzbekistan. At the UNDP Uzbekistan Accelerator Lab, we hope to build upon the success of this trend to foster new private sector partnerships, both for addressing short-term challenges of COVID-19, and longer-term initiatives.
As we embark on the next phase of UNDP’s COVID-19 crisis response, there is an enormous scope for the private sector to address the challenges that lie ahead. All four integrated engagement areas of the response (governance, social protection, green economy and digital disruption and innovation) present exciting and potentially transformative opportunities for private sector partnership.