Nanoenterprises Confront Inflation: A Mixed Recovery Landscape in Early 2023 Update 19 of SEDPI’s Rapid Community Assessment (RCA) January – March 2023

In the first few months of 2023, nanoenterprises continue their journey towards recovery, now facing the added challenge of rising prices. Our latest study at Social Enterprise Development Partnerships, Inc. (SEDPI) provides new insights into how nanoenterprises are doing. Although there are signs of improvement, the issue of inflation is making the recovery process harder for many.

Our findings show that almost half (47%) of the nanoenterprises surveyed feel their business has weakened a bit during the first quarter of 2023. This is actually a 10% improvement from the last quarter, showing that business conditions are getting slightly better. A consistent one-third of nanobusinesses have been able to keep going as usual over the past six months, showing a good amount of strength despite the difficulties.

However, external factors, mainly rising costs, are making things hard for many nanoenterprises. This period has seen a clear impact on nanoenterprises, with many (83%) saying that higher prices are the main reason they are finding it hard to grow. On a brighter note, fewer businesses are reporting no buyers, with the number dropping from 6% in the last quarter of 2022 to 3% now, which suggests that more people are buying again.

When we look at demand, the picture is a bit mixed. While 38% of businesses are seeing more demand for their products and services—a good increase from last year—the number has dipped a bit from December’s 42%. This shows that while demand is better than during the worst of the pandemic, it’s still changing a lot.

The ability to get supplies stayed stable, with 71% of businesses managing to get what they need, similar to last quarter. However, the overall picture of recovery is a bit worrying, as the number of businesses that feel they have recovered from the pandemic’s impact has dropped from a high of 77% to 51% now, again mainly due to the challenges brought by rising prices.

Half of the businesses surveyed say their income has gone down, pointing to higher prices, more competition, and weakening business conditions as the main reasons. On the other hand, those who have seen their income go up say it’s because of more demand, a good season for farming, and having more people in the household earning money.

For this round of rapid community assessment, there were 571 respondents. The majority of respondents are nanoenterprises owned and operated by women (85%), with an average age of 42 and 73% being married. SEDPI is a microfinance institution dedicated to providing ethical financing to nanoenterprises in Agusan del Sur, Davao de Oro, Davao del Norte, and Surigao del Sur. Their efforts have led to significant improvements in various aspects of the beneficiaries’ lives, such as business growth, education, housing, nutrition, and income.

• March 16, 2023 (Update 18): Fragile recovery persists among nanoenterprises post pandemic
• November 27, 2022 (Update 17): 77% of nanoenterprises recover from the pandemic
• April 27, 2022 (Update 16): Only 26% of nanoenterprise resume normal operations from the pandemic
• February 8, 2022 (Update 15): Poverty among nanoenterprises worsens amid the pandemic
• October 23, 2021 (Update 14): Nanoenterprise resuming normal operations slumps
• July 25, 2021 (Update 13): Nanoenterprise recovery almost doubles to 63% a year after lockdowns
• April 22, 2021 (Update 12): 1 out of 4 nanoenterprises adopted online selling in response to lockdowns
• January 20, 2021 (Update 11): Typhoon hampers bounce back of nanoenterprises in CARAGA
• July 17, 2020 (Update 10): Almost 4 in 10 nanoenterprises bounce back to pre-pandemic level
• June 12, 2020 (Update 9): Microenterprises show signs of bouncing back as lockdown eases
• May 28, 2020 (Update 8): 8 out of 10 microenterprises open for business one month after GCQ
• May 22, 2020 (Update 7): Demand for microenterprise products remain weak amid COVID pandemic
• May 15, 2020 (Update 6): Demand slumps on microenterprise products 2 weeks after GCQ
  May 8, 2020 (Update 5): Only 5% of microenterprises back to “normal” in first week of GCQ
• April 30, 2020 (Update 4): Two in three microenterprises hopeful to bounce back two months after lockdow – UPDATE 4
• April 24, 2020 (Update 3): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 3
• April 14, 2020 (Update 2): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 2
• April 6, 2020 (Update 1): Community assessment and recommendations for support to microenterprises and the informal sector during and after COVID-19 – UPDATE 1
• March 30, 2020: Immediate impact of COVID-19 lockdown to microenterprises

These findings highlight a key moment for nanoenterprises as they deal with both the positives of recovery and the negatives of inflation. The strength and flexibility these small businesses have shown are impressive, but there’s still a tough road ahead. As SEDPI keeps supporting the sector with fair loans and help in building skills, focusing on how to deal with inflation and keep businesses stable is more important than ever. The path to full recovery for nanoenterprises shows progress but also reminds us of the need for ongoing support and attention to the changing economy.