What COVID-19 means for women entrepreneurs in the informal sector in El Salvador

The COVID-19 pandemic has affected the global economy and El Salvador has been no exception to those effects. The application of measures to prevent and control the spread of the virus required the closure of shops, intense sanitary procedures, as well as the regulation of essential businesses that were required to stay open during the shutdown. These measures have had a direct and historic impact on the Salvadoran economy, and have created a dismal outlook for the near and far future. 

Aside from businesses deemed essential (food, health and banking) and businesses that were able to successfully adapt to the digital format, COVID has had a severe impact causing desperate measures to maintain profitability and avoid bankruptcy. These measures have involved the sale of assets, the closure of branches, staff layoffs and in more radical cases, adopting completely new business models to meet essential needs during this time. In addition, we have come to realize that for many businesses, digital formatting or electronic commerce is now one of the only forms of survival,  which is especially challenging in a country like El Salvador, where development is still largely in process. 

The reality is even harsher for the less stable areas of the economy, and among them is the informal trade sector, which supports most families and represents 72% of the companies in El Salvador. The closure represents a great blow to the economy for these businesses because they do not have the same tax incentives as the already consolidated companies.

The informal sector relies on daily commerce, which puts them at a disadvantage due to the threat of external factors, such as the pandemic. Unfortunately, the vast majority of entrepreneurs in the informal sector have chosen to close their businesses due to a lack of sales.

At Programa Velasco, we have closely accompanied female entrepreneurs during this time, modifying our own programs and practices to focus on the continued empowerment of women. We have tried to encourage the economic activity of female entrepreneurs who have been seriously affected by the pandemic, not only because of its immediate threat to their health, but also because of its economic impact on their businesses and within their lives. 

Of the 33 active entrepreneurs in the Women’s Empowerment Project, 100% of their businesses are informal. 10 women entrepreneurs prepare foods such as typical snacks, pupusas, tamales or sweets, three women entrepreneurs own chickens and farms and eight are dedicated to making clothing, cleaning supplies and other household items. Only three out of the 33 women in the project were able to operate their businesses during the almost 5 month quarantine because they provided essential food services. With this, they were required to modify their way of selling and change their products to adapt to the evolving needs of the customers. 

Carmen is one of the women entrepreneurs in the Project. She makes fabric mops

Other entrepreneurs have been affected since the products and services they offer are now in less demand, which is why many have chosen to stop selling or decided to dedicate themselves to new endeavors. For many, the income generated from their ventures was the only income within their households, and thus the only way to afford food for their families. 

These are not easy times for any business, but it is especially difficult for those like our entrepreneurs. Each time a daily sale is lost, it means less food for their family. Their goal is often not to generate more profit, but to simply to make it to the end of the week, which has become increasingly difficult to do in this new reality. Customers no longer walk the streets and everyone’s priorities change on a daily basis. “Adapting” sounds easy until you realize it may mean changing everything you know how to do and may require investing time and money you do not have. It is normal to not know where to start.

But it does not have to be so difficult. Through the WEP we seek to provide each entrepreneur with the tools to adapt businesses to new and safe ways of selling. Currently, each one is in the process of updating and adapting their business plan. In this process, they have identified strategies that they will put into practice to stay active in the market.

In a few weeks, our entrepreneur will request access to seed capital for the second consecutive year in a row. To do this, each will present their new strategy and budget that justify the use of capital for the growth or maintenance of their business. 

We invite you to support local businesses and enterprises, because it is these initiatives like the Women’s Empowerment Project that will sustain the Salvadoran economy. 

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