The key role of business incubators and accelerators in Latin America

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How do the region's incubators and accelerators do to remotely support enterprises facing the Covid-19?

 

40 days —as cruel fate would have it, the duration of a quarantine is also the average time that micro- and small enterprises in Latin America are expected to be able to weather the Covid-19 storm. These are the findings of the market study "How is Covid-19 affecting businesses in Latin America?", a survey of 4,472 businesses in 19 countries in the region carried out by the Paraguayan company Nauta jointly with Sistema B. Unsurprisingly, the study shows that business with a monthly turnover of less than USD 5,000 are bearing the brunt of the crisis; 31% will be unable to survive the restrictions associated with the lockdown.

While governments across the continent have taken different measures at different times, there is no escaping the fact that micro- and small enterprises (MSEs) are facing a shock that will persist for months. At the time of the survey (March and April), 87% of the businesses polled reported falling sales and client losses, while more than half (57%) were struggling to pay their workers. The threat of redundancies looms: 24% of the businesses polled stated that they will have to let some of their employees go.

Faced with this situation, incubators and accelerators in the region have sprung into action to help businesses navigate this new scenario. Yawal, an incubator in El Salvador that has been an ADA partner since 2019, is providing remote support to entrepreneurs to help them redesign their business models, create tools that streamline their decision-making and facilitate cash flow management, and prepare the documents needed to renegotiate their loans with financial institutions. This will keep businesses up and running and enable them to take part in ADA's Young Entrepreneur Sustainable Fund Initiative (YES), a programme scheduled for later this year that aims to develop cutting-edge financing mechanisms paired with technical support for young entrepreneurs.

Impact Hub Managua, another one of ADA's YES partners in Central America, is also adapting to the new situation and supporting the Nicaraguan entrepreneur community with webinars and a new distance learning programme for young entrepreneurs, which can be accessed from Wikiflow, a follow-up and training platform designed specially for incubators. The Wikiflow platform, developed by the Belgian SME EDUCA with ADA funding, will enable Impact Hub Managua and Yawal in El Salvador to provide entrepreneurs with effective remote support.

Incubators can also assist microfinance institutions (MFIs) in meeting the needs of microentrepreneurs in the depths of the crisis. The same goes for Alterna (Guatemala), which is transferring its microentrepreneur support methodology to the Salvadoran MFI Credicampo as part of a project funded by ADA. Against this backdrop, new topics have been added to the original package, including how to use technology to unlock new markets, resilience and cash flow management in times of crisis, and relations with providers. As a result, the MFI's technical advisers will receive training over the course of the next few months and be ready to provide close support to their clients once the lockdown ends and the economy starts picking up steam again.

While the true impact of the crisis remains uncertain and will vary from one country to the next, the ecosystem of the region is already gearing up to assist its entrepreneurs in the fight against Covid-19.


A PLATFORM TO TACKLE COVID-19
The Aspen Network of Development Entrepreneurs (ANDE), which ADA belongs to, has joined forces with other institutions in the region to launch a platform with useful tools and information for the Latin American entrepreneur ecosystem in the context of Covid-19: https://www.emprendedoresfrentealcovid19.org

The platform connects entrepreneurs to resources such as financing/subsidy opportunities, webinar series, digital tools and more to cushion the blow of the pandemic on their businesses.

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