The Great Lockdown and the Small Business: Impact, Channels and Adaptation to the Covid Pandemic

This study looks at the impact of the Covid-19 pandemic on Tunisian SMEs and their strategic management during the first lockdown. We analyze three shocks using Tunisia’s national firm census: labor supply, demand, and material supply shocks. We show that the demand shock induced by the pandemic was the major shock to firm revenue in 2020, while the lockdown was the main source of formal job losses. The shortage of material supplies was relatively mild due to decreased demand and limited customer access. Using our own firm survey, we highlight the importance of firms’ strategic management in mitigating the shocks, which depends on the level of shock exposure: changes in selling/production process were more important for firms in the industries that were kept open during the lockdown, while the ability to work from home and trade credit were equally important for all firms.