The CornerShop Saga
Arshad’s story: resourcefulness, resilience, and innovation
The CornerShop SAGA
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Making digital transformation less daunting for rural corner shops
Making digital transformation less daunting for rural corner shops
The images below highlight the personas of our three diarists who use digital tools and platforms to either sell, purchase or promote products and services for their enterprises.
The common threads that connect Suryo, Edi, and Mulyani are access to a relatively stable network and personal smartphones. Often overlooked, a clear value proposition to go digital is the most significant factor common to the three diarists.
Aggressive above-the-line (ATL) campaigns on television and radio, especially by e-commerce players, helped raise awareness of digital platforms in rural areas. The campaigns also communicated attractive promotional offers that encouraged some diarists to try digital platforms for their business. However, FSS drivers were crucial to encourage the uptake of digital platforms and drive their usage in rural areas.
Nudges from children in the family also motivated our diarists to conduct the first few transactions on digital platforms. Most of these transactions involved purchases from e-commerce platforms, primarily for personal consumption. Knowledge transfer from other family members and friends working in metro cities like Jakarta and familiar with digital tools for business also complemented these nudges.
Support services, such as logistics and agent banking in rural locations, deepened in Indonesia. This deepening also significantly encouraged the use of digital tools and provided much-needed convenience. The option for cash on delivery (COD) made users confident to conduct the initial few purchases. In contrast, banking agents in the neighborhood made it convenient to make and receive digital payments for business transactions. Edi used this opportunity to find spare parts, which were not readily available in his location.
The volumes or sustained usage was primarily a result of a strong value proposition to go digital. The value proposition varied based on individual context. For example, e-commerce provided Suryo an opportunity to get better prices and attract new customers, which resulted in a regular inflow of money into his account.
The experiences of our diarists highlight critical points to consider while designing programs and policies to build the digital capacities of rural micro-enterprises. Some of these policy lessons are as follows:
1. Communication of the value proposition is critical to adoption: Many initiatives to deepen the digital economy focus only on the process of signing up and using digital tools or platforms. They fail to communicate the value proposition of embracing the digital ecosystem effectively. Moreover, value propositions may differ based on the profile of micro-entrepreneurs. Generic communication fails to convince potential users in such a case. The initiatives should segment micro-entrepreneurs based on their personas and customize the messaging around the value proposition. This move will enable concerned entrepreneurs to relate to the proposed benefits of joining the digital bandwagon.
2. Rural entrepreneurs build trust through peer learning: Rural micro-enterprises relate better to information from someone they know and trust. Hence, programs that involve community members in capacity-building efforts are more likely to succeed. Rural community-based institutions, such as cooperatives, are crucial to ensuring digital tools and platforms reach the last mile.
3. Local success stories make the learning process more tangible and relatable: Rural micro-entrepreneurs gain confidence from success stories in their community. Capacity-building programs must include such case studies or personal interactions.
4. Quick and intuitive signup is essential for uptake. Still, usage depends on access to support services: Even if micro-entrepreneurs learn about the processes related to an individual platform or tool, knowledge of interconnections between different platforms and support services is essential to understand the ecosystem better. The learning curriculum should include a detailed guide of products and services offered by support service providers in their area.
5. Micro-entrepreneurs should be equipped to resolve grievances and safeguard themselves against cybercrimes: Micro-entrepreneurs face several risks as they enter the digital ecosystem. They need adequate knowledge and capacities in preventive and curative measures to avoid and resolve any potential grievances. Lack of such capabilities may affect their trust in the system.
The operations of micro-enterprises witnessed a paradigm shift in the post-pandemic era. Embracing digital ecosystems became the new normal. The rapid growth in digital platforms disrupts corner shops, which form the backbone of Indonesia’s rural economy. Indonesia needs robust policies and programs to facilitate the digital transformation of rural corner shops.
Raunak Kapoor
SENIOR MANAGER
Rahmatika Febrianti
ASSISTANT MANAGER
Yani Parasti Siregar
ASSOCIATE
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
Je suis M.Y originaire de Dire région de Tombouctou dans le nord du Mali. Depuis 2012 cette partie de mon pays est paralysée suite à une rébellion Touareg (ethnie du nord du Mali), suivie de l’invasion des Islamiste d’Aqmi, ce qui m’a amené vers la capitale à la recherche de vie meilleur.
Je subvenais aux besoins de ma famille à travers l’agriculture qui est l’activité principale de la zone, mais avec l’insécurité il n’est plus possible de cultiver et ceux qui se hasardaient à faire du commerce et autres activités sont très souvent pillés par les rebelles et par les Islamistes sous prétexte d’effort de participation à la lutte pour la libération de l’«AZAWAD». Donc je ne pouvais plus rester, car il n’y avait pas de travail pour moi là-bas.
J’ai décidé de me rendre à Bamako car plus jeune j’y ai déjà été pour chercher de l’argent et j’ai gardé le contact avec mes anciens patrons mais également certains membres de la famille qui y vivent depuis longtemps. Comme je ne pouvais plus cultiver s’était ma seule option pour m’en sortir : venir à Bamako pour mener une activité qui me permettra de subvenir aux besoins de ma famille en ouvrant une boutique.
A mon arrivé dans des conditions vraiment difficiles sans le moindre franc, j’ai d’abord commencé a travaillé dans un magasin appartenant à un oncle, ce travaille me permettait de faire un peu d’économie mais aussi d’envoyer de l’argent au village pour ma famille. Je rendais souvent visite a certains de mes anciennes connaissances pour leur parler de mon projet de boutique et voir comment ils peuvent m’apporter leurs soutiens, vu qu’il était impossible pour moi d’avoir un prêt à la banque vu les conditions et les stéréotypes religieuses (l’intérêt à payer sur le crédit) après quelques mois ma boutique vu le jour avec le soutiens certains ressortissant de mon village en espèce et en nature. Tout marchait presque bien car enfin même si je suis loin de ma famille je parvenais quand même à m’en occuper et à faire des économies pour les aléas de la vie, les dépenses de santé et l’éducation de mes enfants même si les écoles étaient fermées.
Dernièrement ma vie eu une autre tournure avec l’avènement du coronavirus (COVID-19), et en cette période de pandémie le gouvernement a décrété certaines mesures préventives tel que : le respect des mesures barrières, le couvre-feu et la fermeture des frontières aériennes et terrestres.
Cela a fortement joué sur mon activité de commerce vu le temps réduit pour avoir accès aux services, mais surtout dû à la fermeture des frontières, tout ce que je vends est importé donc la fermeture des frontières a engendré non seulement une hausse des prix mais également des difficultés d’approvisionnement de ma boutique en matière première.
Dans schéma j’ai eu la visité de Sékou TRAORE en début janvier 2021, qui est venu me parler du « Projet corner shop », qui consisté à colleter chaque semaine des données sur les activités de ma boutique, mais également me posé des questions sur ma situation de vie, de la boutique. Au départ je me disais que c’était quelqu’un qui voulais s’imprégner de ma situation économique pour causer du tort et après nos discussions j’ai accepté avec réserve.
Au début c’était difficile non seulement j’avais beaucoup de réserve et ça prenait mon temps et je n’y gagnais rien, je n’avais pas aussi la culture de parler ouvertement de ma situation économique surtout à un inconnu. Nombreux sont les boutiquiers dans ma situation qui ont été victimes de d’arnaque et de braquage, il y a aussi le fait de retenir tout ce que je gardais comme épargne par jour, mes dépenses et autre la difficulté était liée au fait que j’ai l’habitude de faire mes comptes que trimestriellement. Pour cela j’ai reçu un cahier dans lequel je pouvais tout notés et ce qui a facilité le travail et pour Sékou et pour moi également.
Mais je dois reconnaitre que l’application « FINBIT », m’a permis d’être vraiment organisé et de faire beaucoup attention à certaines dépenses à optimiser mes épargnes et de me fixer des objectifs. C’est un projet innovant et vraiment utile pour autres boutiquier nous remercions L-IFT en plus de la collecte des données nous demandons à L-IFT des formations en matière de commerce pour augmenter nos compétences, de financement, de nous aider à mettre des stratégies en œuvre pour augmenter notre revenu et faire face à nos charges. Car force est de reconnaitre que notre situation est particulière en plus de la pandémie nous vivons une situation politique instable qui se manifeste par des coups d’Etat répétitifs en plus de la rébellion et le terrorisme.
Le projet ” Journaux de magasin du coin” collecte des données en Afrique et en Asie auprès de 150 petites entreprises comme celle de Mohammad. Les données que nous obtenons nous aident à comprendre comment ces petites entreprises fonctionnent, comment elles ont été affectées par la pandémie de COVID-19 et comment elles peuvent se remettre des effets de la pandémie.
Au Mali, nous avons recueilli des données auprès de 18 de ces petites entreprises depuis janvier 2021 et nous obtenons des informations utiles sur la situation à laquelle ces petites entreprises sont confrontées pendant cette pandémie de Covid-19. De ces informations-clés qui sont partagées ci-dessous et soutenues par les données réelles collectées, nous explorons comment les revenus, les dépenses, les prêts et l’épargne ont changé pour Mohammad et pour le reste de l’échantillon au Mali pendant cette période complexe.
1. Les fluctuations de revenus
Les totaux des revenus mensuels reflètent les effets du Covid-19 sur les affaires au Mali. Avec l’augmentation des infections par le Covid-19 au Mali en début Janvier, des mesures telles que des couvre-feux et la fermeture des frontières ont été mises en place et ont eu un impact négatif sur les affaires. Les chaînes d’approvisionnement ont été perturbées d’un côté et, de l’autre, les couvre-feux ont réduit les heures d’ouverture des magasins. Pour Mohammad, il a perdu beaucoup de revenus possibles car il devait fermer plus tôt, tandis que le coût des approvisionnements augmentait et c’était difficile à cause de la fermeture des frontières.
«Le COVID au début de l’année a vraiment affecté ma vie de façon négative parce qu’il n’y a pas eu aucune mesure de soutien pour les commerçants et les dépenses des ménages restent les mêmes, nous devons faire face à la situation, nous devons payer le loyer, la nourriture, les soins de santé et d’autres compromis.»
Comme on peut le voir sur les graphiques, les mois de Février et Mars ont été difficiles pour les affaires, car la deuxième vague de Covid-19 prenait l’ampleur. En avril, les activités ont commencé à augmenter car les vaccinations ont été mises en œuvre et les restrictions liées au Covid-19 ont commencé à être assouplies, ce qui a entraîné plus d’activité pour les affaires.
Pour Mohammad, son business présente de nombreuses fluctuations, car les changements des restrictions liées au COVID-19 étaient importants comme son business opère dans un quartier qui avait les premières infections et qui était considéré comme zone à risque. Cependant, au mois de Mai, son quartier avait également commencé à assouplir les restrictions liées au COVID-19 et il a constaté une augmentation de son niveau de revenu.
Malheureusement, en juin, avec l’augmentation des prix de certains produits tels que l’huile et les céréales, qui sont les principaux produits vendus par Mohammad, il n’a pas été en mesure d’approvisionner adéquatement son magasin, ce qui a considérablement réduit ses revenus.
2. Les fluctuations de dépenses
Les dépenses reflètent également les irrégularités et les perturbations causées par Covid-19.
Dans les graphiques ci-dessus, nous voyons les dépenses de business de l’ensemble de l’échantillon et celles de Mohammad. Pour Mohammad, nous pouvons voir que les dépenses de son business augmentent au cours des mois qui suivent un début d’année difficile causé par Covid-19. Il apparaît qu’en Février et Mars, Mohammad n’a pas beaucoup dépensé pour acheter de nouveaux stocks et que ses ventes à cette période provenaient de la vente du vieux stocks et il ne s’est pas réapprovisionné car les marchandises n’étaient pas facilement disponibles à cause de la fermeture des frontières et des coûts élevés à cette période. Lorsque les restrictions ont été assouplies, il a pu se procurer davantage de stocks pour son business et ses dépenses ont donc augmenté pendant la période d’Avril à Mai. Nous avons également constaté que ses revenus ont augmenté après qu’il ait fait les achats supplémentaires du stock en avril. Sur le graphique de ses revenus, on peut voir que le mois de Mai a été le plus rentable.
En ce qui concerne certaines des dépenses spécifiques que nous avons revues dans les graphiques ci-dessous – les dépenses de santé et de produits de toilette, les dépenses d’alimentation à la maison et les dépenses d’habillement et de chaussures – nous pouvons constater que les dépenses de santé et de produits de toilette ont été plus élevées en Février, au pic de la pandémie, lorsque les magasins devaient s’assurer qu’ils disposaient des désinfectants adéquats et des outils de lavage des mains conformément à la réglementation sur le Covid-19.
Les dépenses ont commencé ensuite à diminuer au cours des mois avec la stabilisation de la situation du Covid-19. Les dépenses en “alimentation à la maison” suivent une tendance opposée : elles sont plus faibles au pic de la deuxième vague, lorsque les ménages ont dû économiser autant qu’ils le pouvaient en prévision de temps imprévisibles à venir à cause du Covid-19. Les dépenses en vêtements et en chaussures n’apparaissent qu’en Février et en Juin, avec des montants minimes, car elles ne seraient pas prioritaires pendant une pandémie.
Ces tendances nous donnent une idée du type de priorités qui s’imposent pendant une pandémie et la façon dont une pandémie peut influencer les habitudes de dépenses des entreprises et des ménages.
3. L’accès au financement est un défi
Un peu plus de la moitié des répondants (10 des 18 répondants) ont jusqu’à maintenant pris des prêts, y compris Mohammad. Il est intéressant de noter que 8 des répondants ont contracté des prêts sous forme de stocks auprès de fournisseurs pour être payés plus tard, tandis que seulement 2 ont contracté des prêts à d’autres endroits (un auprès de la famille et l’autre auprès d’un autre commerçant local). Cela montre que le financement de la chaîne d’approvisionnement est maintenu pendant la pandémie et que peu d’alternatives informelles sont apparues. Aucun autre prêt n’a été contracté auprès d’institutions comme les banques, les institutions de microfinance, l’argent mobile, etc. Quel type de prêt ce groupe de commerçants avait l’habitude de contracter avant le COVID-19, c’est quelque chose que nous voulons explorer dans une enquête spéciale.
Mohammad est l’une des personnes qui utilisent le financement de la chaîne d’approvisionnement. Mohammad a reçu au total 300 000 CFA de prêts de la part de ses fournisseurs et a réussi à rembourser 230 000 CFA et n’a plus qu’une dette actuelle de 70 000 CFA. Son business peut donc continuer à fonctionner grâce à ces types de facilités de crédit de la part des fournisseurs et il s’est engagé à effectuer des remboursements réguliers, même si pendant cette pandémie, ses paiements ont été affectés par des revenus irréguliers.
Son premier prêt a été enregistré le 31 janvier et il a commencé à le rembourser même pendant la pandémie, où il a commencé à effectuer les remboursements le 7 Février. En Mars et en Avril, il n’a pas fait de paiements. C’était pendant la période de confinement strict et aussi en Avril son revenu avait diminué. Avec une augmentation des revenus en Mai, il a pu recommencer à effectuer des paiements.
4. L’épargne, l’évolution du Covid-19 et les fluctuations du revenu sont reliées.
Les totaux mensuels de dépôts d’épargne montrent une tendance intéressante par rapport au Covid-19. A partir de Février, nous constatons que les totaux de dépôts d’épargne, tant pour Mohammad que pour l’échantillon plus large au Mali, diminuent et ne recommencent à augmenter que lorsque la situation du Covid-19 se stabilise et que les revenus sont meilleurs. Ils diminuent à nouveau en Juin á cause de la baisse de revenus en Juin. Nous constatons que très peu de retraits d’épargne ont été effectué. Mohammad lui-même n’a effectué qu’un seul retrait en Avril, de 30 000 CFA, ce qui a entraîné un pic dans le total de retraits d’épargne pour l’ensemble de l’échantillon au mois d’Avril.
La fluctuation causée par le Covid-19 a été sévère, mais les petites entreprises locales ont pu résister à la pression et ont fait preuve d’une incroyable résilience. Grâce aux facilités de crédit des fournisseurs, à une gestion prudente des dépenses, à l’épargne et aux prêts, des personnes comme Mohammad continuent d’approvisionner leurs communautés en provisions quotidiennes et espèrent toujours une meilleure régularité et des profits au sein de leurs entreprises. Ils ont encore beaucoup d’espoir de développer leurs entreprises par l’acquisition des connaissances et des financements. Le projet de Journaux de magasin du coin, grâce à sa méthodologie des journaux financiers détaillés, révèle tous ces différents aperçus sur la pandémie et sur le fonctionnement des petites entreprises communautaires.
ÉCRIT PAR
Sékou Traore
Chercheur de terrain
MHLALISI NCUBE
DIRECTEUR DE PROGRAMME
ANNE MARIE VAN SWINDEREN
FONDATEUR ET DIRECTEUR GÉNÉRAL
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
My name is Mohammad Yattara, from Dire, region of Timbuktu in northern Mali. Since 2012 this part of my country has been paralyzed by a Tuareg rebellion (an ethnic group from northern Mali), followed by the invasion of the Islamists of Aqmi, which brought me to the capital in search of a better life.
I was providing for my family needs through agriculture, which is the main activity of the area, but with insecurity it is no longer possible to cultivate and those who ventured to do business and other activities are very often looted by the rebels and by the Islamists under the pretext of an effort to participate in the struggle for the liberation of the «AZAWAD». So, I could not stay because there was no work for me there.
I decided to go to Bamako because when I was younger, I had already been there before to look for money and I stayed connected with my former bosses but also with some family members who have lived there for a long time. As I could no longer cultivate my land, this was my only option to survive: to come to Bamako and try to open a store to provide for my family.
When I arrived in difficult conditions without money, I first started to work in an uncle’s store, this work allowed me to make some money and send money to the village for my family. I often visited some of my old acquaintances to talk to them about my store project and to see how they could support me, since it was impossible for me to get a loan from the bank because of the conditions (the interest to be paid on the credit) and the religious stereotypes I faced. After few months, my store was born with the support in cash and in kind from some people from my village. Everything was going well because even if I was far from my family, I was able to take care of them and to save money for emergencies, for health expenses and for my children’s education even if the schools were closed.
Recently my life had another turn with the advent of the corona virus (COVID-19), and in this time of the pandemic, the government decreed certain preventive measures such as compliance with lockdowns, curfew and closure of air and land borders.
This strongly influenced my business activity, given the reduced working hours, but mainly due to the closure of the borders as everything I sell is imported, so the closing of the borders has not only led to a price increase but also to difficulties in supplying my shop with raw materials.
Within this context, I had the visit of Sékou TRAORE (L-IFT Field Researcher) in early January 2021, who came to talk to me about the “corner shop project”, which consisted of collecting weekly data on the activities of my store, but also asked me questions about the situation of my life, of my store. At first, I thought it was someone who wanted to get into my economic situation to cause harm and after our discussions I accepted with reservations.
At the beginning it was difficult. Not only did I have reservations, it took my time and I gained nothing. I also did not have the culture to speak openly about my economic situation especially to a stranger. Many shopkeepers in my situation have been victims of scams and robbery and there is also the fact that I had to now keep track of my daily savings, expenses and other things. The difficulty was related to the fact that I used to do my accounts only quarterly. For that, I received a notebook in which I could note everything and that facilitated the work both for Sékou and myself.
But I must admit that the application “FINBIT”, allowed me to be really organized and to pay attention to certain expenses, to optimize my savings and to set goals. It is an innovative and useful project for other shopkeepers. We thank L-IFT for the data collection and we ask L-IFT for training in business to increase our skills, in financing, to help us implement strategies to increase our income and meet our expenses. Because we must recognize that our situation is, in addition to the pandemic, we live in an unstable political situation that manifests itself in repeated coups d’état, rebellion and terrorism.
The Corner shop diaries project is collecting data in Africa and Asia from 150 small businesses such as that of Mohammad. The data we are gaining is helping us to understand how these small businesses work, how they have been affected by the Covid-19 pandemic and how they can recover from the effects of the pandemic.
In Mali, we have been collecting data from 18 such small businesses from January 2021 and are getting useful insights on the situation facing these small businesses during this Covid-19 pandemic. In these key insights that are shared below and supported by actual data collected, we explore how incomes, expenses, loans, and savings have been changing for Mohammad and for the rest of the sample in Mali during these complex times.
1. Income fluctuations
Monthly income totals reflect the effects of Covid-19 on the businesses in Mali. With the increase in Covid-19 infections in Mali in early January, measures including curfews and closure of borders were put in place and had a negative impact on business. Supply chains were disrupted on one end and on the other, curfews reduced the amount of trading hours. For Mohammad, he lost a lot of possible income as he would have to close early while the cost of supplies increased and was difficult because of the closure of borders.
“COVID at the beginning of the year has really affected my life in a negative way because there was no support measure for shopkeepers and household expenses remain the same, we have to face it, we have to pay rent, food, health care and other accommodations.”
As can be seen on the graphs, February and March were difficult months for the businesses as the second wave of Covid-19 was taking its toll. In April, business began to surge as vaccinations were now being implemented and Covid-19 restrictions were beginning to get relaxed so there was more activity for the businesses.
For Mohammad, his business shows many fluctuations as the changes on Covid-19 restrictions were significant as his business was operating in a neighbourhood that had the earliest infections and was considered a hotspot. However, in May, his neighbourhood had also started to relax the Covid-19 restrictions and he saw a spike in his income levels.
Unfortunately, in June, with the increase in the price of certain products such as oil and cereals which are the main products that Mohammad sells, he was unable to adequately supply his shop and this has greatly reduced his income.
2. Expense fluctuations
Expenses also reflect the inconsistency and disruption caused by Covid-19.
In the graphs above, we see the business expenses faced by the entire sample and that of Mohammad. For Mohammad, we can see his business expenses growing over the months after a tough start to the year caused by Covid-19. It appears that in February and March Mohammad has not spent much on buying new stock and his sales at that period were coming from selling old stock and he did not restock because goods were not readily available due to closed borders and high costs at the time. As the restrictions were relaxed, he was able to source more stock for his business and his expenses therefore grew during the April to May period. We also saw his income growing after he had made the additional stock purchases in April. On his income graph it can be seen that May was his highest earning month.
In terms of some of the specific expenses we have reviewed in the graphs below – health and toiletries expenses, food at home expenses, and clothing and shoes expenses – we can see higher health and toiletries expenses in February at the height of the pandemic where shops had to make sure they have adequate sanitisers and hand washing tools in line with the Covid-19 regulations.
The expenses then begin to slowly decrease over the months with the Covid-19 situation stabilising. Expenditures on ‘food at home’ take an opposite trend where they are lower at the height of the second wave where households had to save as much as they could in anticipation of the unpredictable times ahead because of Covid-19. Clothing and shoes expenses are only seen in February and June with minimal amounts as these would not be a priority during a pandemic.
These trends give us an idea of the sort of priorities that take hold during a pandemic and how a pandemic can influence the spending patterns of businesses and individual households.
3. Access to finance is a challenge
Just over half of the respondents (10 of the 18 respondents) have so far taken loans including Mohammad. Interestingly, 8 of the respondents have taken loans in the form of stock from suppliers to be paid later while only 2 have loans from other places (one from family and one from another local shop keeper). This shows that supply chain finance is maintained during the pandemic and only a few informal alternatives have emerged. There are no other loans that have been taken from institutions such as banks, micro-finance institutions, mobile money wallets, etc. What type of loans this group of shop keepers used to take, before Covid-19 is something we want to explore through a special survey.
His first loan recorded was on 31 January and he began to service it even during the pandemic where he started making repayments on 7 February. In March and April, he missed making any payments. This was at a time during the strict lockdowns and also in April where his income had fallen. With a rise in income in May he was able to start making payments again.
Mohammad is one of the people using supply chain finance. Mohammad received in total 300,000 XOF in loans from suppliers and he has managed to pay back 230,000 XOF and only remains with a current debt of 70,000 XOF. His business is therefore able to keep going because of these types of credit facilities from suppliers and he is committed to make steady repayments although during this pandemic, his payments have been affected by the inconsistent income.
4. Savings, Covid-19 trends, and Income fluctuations are correlated
Savings deposited monthly totals show an interesting trend in relation to Covid-19. From February, we see that savings deposits totals for both Mohammad and the larger Mali sample take a dip and only start to increase again when the Covid-19 situation stabilises and incomes are better. They go down again in June because of the decrease in income in June. We see very few savings withdrawals happening. Mohammad himself only made one withdrawal in April of 30,000 XOF which resulted in the spike in the Savings withdrawals totals for the entire sample in the month of April.
The volatility caused by Covid-19 has been severe but local small businesses have been able to withstand the pressure and have shown incredible resilience. Through supplier credit facilities, careful management of expenses, savings, and loans, people such as Mohammad continue to supply their communities with daily provisions and still look forward to better consistency and profits within their businesses. They still have many hopes of growing their businesses through getting knowledge and finance. The corner shop diaries project through its detailed financial diaries methodology, reveals all these different insights into the pandemic and into how small community businesses operate.
WRITTEN BY
Sékou Traore
Field Researcher
MHLALISI NCUBE
PROGRAMME MANAGER
ANNE MARIE VAN SWINDEREN
FOUNDER AND MANAGING DIRECTOR
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
However, even though she faced difficulties accessing the internet, Yuyun used several methods to sell her products to her clients, who live as far away as Jakarta. These included the use of WhatsApp to advertise her small business, promotional posters that she created on a design app, and Shopee—an e-commerce platform—to sell her products. What is her secret of being technologically savvy and well connected in a place without internet access?
Yuyun showed us a box stenciled “Voucher – Wi-Fi” where she kept a pile of paper coupons (the vouchers). The coupons allow buyers to access the internet. She sells two kinds of coupons, one worth IDR 2,000 (~USD 0.14) for two-hour unlimited use and another worth IDR 5,000 (~USD 0.35) for all-day unlimited use. Such coupons are reasonably cheap and cost the same as a small box of milk that children usually buy. The package details are printed on the coupon. Customers only need to turn on the Wi-Fi feature on their mobile phone, enter the username and password, and connect to the internet.
The chart below shows the share of Wi-Fi voucher sales in Yuyun’s weekly revenue compared to other products, for example, snacks and daily necessities. The revenue from Wi-Fi voucher sales varied from time to time, from IDR 8,000 (~USD 0.56) to IDR 185,000 (~USD 12.96) per week. It shows that despite not being the main selling product, the Wi-Fi voucher remained a constant part of Yuyun’s total revenue.
Yuyun is not the only one who sells Wi-Fi vouchers in her area. The Wi-Fi voucher business is mushrooming, especially in densely populated areas with many blank spots in Temanggung and Wonosobo. The business model of Wi-Fi vouchers is through agencies. Small sellers like Yuyun are agents who receive routers and coupon papers from larger entrepreneurs. These entrepreneurs usually understand networks and other technical issues better and also determine the market price of Wi-Fi vouchers. Agents like Yuyun earn around IDR 500 – IDR 1,000 (~USD 0.035 – USD 0.070) from sales per coupon.
The signal of the Wi-Fi network, which Yuyun sells vouchers for comes from an access point device installed in her house. The access point functions as a “repeater” and extends the range of the internet signals that the users could not reach earlier. Yuyun spent IDR 70,000 (~USD 4.89) to install the access point. Meanwhile, the fee charged for personal use is IDR 350,000 (~USD 24.45) for access point installation and IDR 30,000 (~USD 2.10) for internet usage per user per month.
The Wi-Fi signal is sourced from the fiber optic cables owned by big internet providers, such as PT Telekomunikasi Indonesia (IndiHome). The Wi-Fi voucher entrepreneurs usually live close to the location of the fiber optic cables. They subscribe to internet data from an established provider and then they connect their modem to the router using a LAN cable. This router serves as a bandwidth distributor. Some routers also have an implanted access point to transmit the signal to the user, although others have to buy an access point device separately. The router has hotspot software embedded. The device is then connected to the PC using a cable to operate the software. The Wi-Fi voucher entrepreneur then sells the Wi-Fi signal through agents like Yuyun. They install access point devices in the agent’s house or corner shop so the signal can be distributed there. Ideally, Wi-Fi users should be maximum of five meters from the access point device to get optimum signal strength.
The router, access point devices, and other tools needed for this business are not hard to procure. These tools can be purchased easily at local computer stores or through e-commerce platforms. The prices also vary and are dynamic following the fluctuation of the USD exchange rate.
The quality of the Wi-Fi signal is more stable than the ordinary mobile network signal because it comes from an optical cable and is relayed by several extenders constantly. Errors or outages are rare. When they occur, it is usually for three reasons. First, the big providers may experience system disruption, for example, due to extreme weather. Second, the Wi-Fi entrepreneur may not have paid the internet subscription bill to the primary provider. Third, the access point device may be damaged, for example, due to unstable electricity or lightning strikes. Disruptions are rare because the big providers carry out system maintenance routinely and the electricity supply is usually good. However, if services are disrupted, an agent like Yuyun cannot do anything because they depend heavily on the performance of the Wi-Fi entrepreneur and the primary provider.
The Wi-Fi voucher model is not something new. Big mobile providers like Telkomsel have previously sold internet voucher products at affordable prices. The demand for internet packages has increased since 2013, along with the widespread use of Android-based mobile phones. However, the bigger mobile providers’ signal usually comes from a base transceiver station (BTS) tower, which is not as stable as the signal from optical cables. Compared to optical cables, the BTS tower has a broader coverage area. The signal from the BTS tower faces more obstacles or blockaders, such as hills, large trees, and buildings, resulting in blanks spots. The Wi-Fi voucher business carried out by local entrepreneurs who use optical cables covers these gaps.
Coming back to Yuyun, we see that despite limited access to resources, Wi-Fi vouchers proved to be an opportunity. The entrepreneur used the internet to develop her business despite limited access to resources. However, information obtained from the internet was not the only inspiration for Yuyun to become technologically savvy. For example, migrant neighbors or relatives visiting from the city also gave Yuyun insights into current events and opportunities for those like her who lived in rural Indonesia.
Source: ENRD
WRITTEN BY
Rahmatika Febrianti
assistant manager
Yani Parasti Siregar
associate
Raunak Kapoor
SENIOR MANAGER
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Life on credit: Why and how do corner shop owners take loans?
Life on credit: Why and how do corner shop owners take loans?
Yuyun sells food items and products of daily use from a small shop from her home in Central Java, Indonesia. By late February, 2021, Yuyun had four outstanding loans. While four concurrent loans seem excessive, Rahmat Kabir from Hrishipara in central Bangladesh goes a step further. By the middle of 2021, Rahmat had 13 outstanding loans—seven from multiple microfinance institutions (MFIs), five from friends, and one from a neighbor.
However, juggling multiple loans is not common to all micro-enterprise owners. Only two of our diarists from India had more than two outstanding loans—most had either one loan or no loan at all. One such diarist, Manish Chouhan, runs a grocery shop in Madhya Pradesh, India. Manish was trapped in a vicious cycle—reduced stocks due to a drop in income led to lower sales and a consequent decrease in revenue. To break this cycle, Manish had to borrow INR 10,000 (~USD 134.79) from his friends to purchase supplies for his shop.
1. Taking loans is more common in Bangladesh, followed by India and Indonesia
Other possible reasons for the difference in number and value of loans across countries:
The diarists did not divulge the details of loans taken willingly. We had to gain their trust and make them comfortable enough to reveal this information. Taking loans is not a desirable practice in the cultures of some of our countries of research. This may be a significant factor responsible for this reluctance in sharing information, and the levels of reluctance also vary across countries. Another factor is the difference in skills of data collectors who acquired the sensitive information related to credit. However, we can safely assume that these are not the only factors that contribute to the significant difference in the number of loans. Borrowing behaviors may also vary based on historical and market-level aspects of the country, as mentioned before.
2. Banks and MFIs are significant sources of loans
These practices reflect the experiences of our diarists in these countries. Diarists in India prefer to secure loans from banks, with seven out of 10 loans taken from banks. In Indonesia, diarists took almost half of the loans (eight out of 17 or 47%) from MFIs, five from banks, and the remaining four from other sources like cooperatives and friends or relatives. Since we conducted our research in the primary working area of CU Lestari, our partner in Indonesia, several diarists have outstanding loans with the MFI.
Due to the overwhelming presence of MFIs in Bangladesh, diarists took 70% i.e. 19 out of 27 loans from MFIs. The remaining eight loans were taken from informal sources like friends and relatives. The abundance of access is a major factor that influences the choice of borrowers regarding the source of the loan. Prominent MFIs like Grameen Bank and BRAC, mid-sized MFIs like DSK, and smaller local MFIs like Sahaj Sanchay operate in Hrishipara, the area that our project covered. This made it easier for diarists to take multiple loans, either under their names or through accounts owned by people they know. Moreover, most MFIs in Bangladesh have also relaxed their terms of repayment after the pandemic.
The interest rates also vary significantly depending on the source of the loan. In India, banks charge interest rates of 7% to 13%, whereas money lenders charge interest as high as 18%. In Indonesia, the interest rates range from 2% to 24%, and in Bangladesh, they can go as high as 36% per year.
Informal loans from friends or relatives are usually interest-free and have flexible terms of repayment. Hence, these loans are the first choice for many. Informal loans are also the choice of instrument to repay other outstanding loans with stricter terms of repayment.
3. Diarists take loans primarily for business purposes
Case 1: Rajesh Sharma runs a small restaurant in a town in north India. While Rajesh was cautious about taking a loan, he needed credit to purchase a small refrigerator for his shop to store perishable items. Rajesh found it challenging to access credit from a bank due to a lack of collateral. Even from other sources, Rajesh could not find medium to large loans at less than 12-14% annual interest rates. Even providers of small loans usually charge around 18-24% per year. Rajesh finally managed to secure a loan worth INR 18,000 (USD 250) from a local NBFC that he had to repay in 15 monthly installments of INR 1,420 (USD 20). Rajesh found the process convenient as a representative from the company visited his shop to get all the documents filled. Convenience and moderate interest rates were the two key factors for Rajesh.
Case 2: Yuyun is a serial entrepreneur from rural Temanggung, Indonesia. She once rented a shop outside her village to sell airtime and perfume. To open the shop, she took a four-year MFI loan worth IDR 14,500,000 (USD 1,008.74) from CU Lestari. However, since the location was not strategic, the shop failed within three months. To ensure the smooth monthly repayment of her MFI loan and to meet ends, she needed to start another business. For that, she took a one-year loan from neighborhood ASCA, worth IDR 15,000,000 (USD 1,043.53). She used the ASCA loan to open a corner shop from her home selling food and daily needs items and daily necessities and to open a coffee roasting business with her husband. She also once borrowed IDR 1,000,000 (USD 70) from her neighbor to buy coffee beans, which she has repaid within a month. Her corner shop and coffee business run well, helping Yuyun repay her MFI loan. The ASCA loan has also been repaid now, using the money loaned from her sister. She still struggles to repay her sister; fortunately, the repayment term is flexible and with no interest because they are family.
Conclusion
The samples[1] from India, Indonesia, and Bangladesh highlight the difference in behavior regarding loans in South and Southeast Asia. Financial service providers can extract essential lessons from the complete picture of how and why borrowers take loans, their pain points, and the catalysts of loan adoption.
Loans are not always a burden but a stepping stone for growth, as evident in Case 1. Micro and small enterprises need access to finance to scale up and grow their business. Even small loans can have a significant impact on these enterprises. Loans help in consumptions smoothing, to build a cash reserve or to repay another loan, as highlighted in Case 2. However, mostly informal micro-enterprises still struggle with the lack of loan products tailored to their needs.
Easy access to credit and reasonable interest rates can help convert a cautious borrower like Rajesh (Case 1). Simultaneously, while too many options can make it easier to access credit, they can also lead to a string of loans and trap borrowers in a cycle of debt, as seen in the case of Rahmat from Bangladesh.
Stakeholders can learn from the example of CU Lestari—the MFI has attracted numerous LMI customers through its direct approach, such as providing a cash pick-up service for loan repayments. As businesses bounce back after the pandemic and the demand for credit rises, early movers will reap the benefit.
[1] We have not extracted the diaries data from a representative sample. Hence, the insights cannot be generalized.
WRITTEN BY
Rahul Chatterjee
manager
Yani Parasti Siregar
associate
Rahmatika Febrianti
assistant manager
Manoshij Banerjee
assistant manager
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
The CornerShop Diaries project – Data collectors In africa
Arshad’s story: resourcefulness, resilience, and innovation
The CornerShop Diaries project - Data collectors In africa
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
The CornerShop Diaries project – Data collectors in Asia
Arshad’s story: resourcefulness, resilience, and innovation
The CornerShop Diaries project - Data collectors in asia
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Volatility and resilience: Lessons from the corner shop diaries research in Nigeria
Volatility and resilience: Lessons from the corner shop diaries research in Nigeria
Adaeze Degreat[1], a middle-aged mother of two, works in a local teaching hospital in Southern Nigeria and runs a supermarket that sells groceries and daily provisions. A steady income from her salary and a variable income from her shop keeps Adaeze’s household finances mostly manageable. That is, until COVID-19 hit Nigeria. The disease was first reported in the country on 27th February, 2020. By April, several states in the country were under a complete lockdown, barring essential service providers, such as medical facilities and grocery shops.
The virus struck communities and upended people’s lives in an unprecedented way, affecting their economy in particular. Different states implemented lockdowns during March-June, 2020. The baseline data of the National Longitudinal Phone Survey, which was collected in April-May, 2020, indicates that 35-59% of the households that needed staple food could not purchase it, 26% of the households could not access medical treatment, and the income of 79% households decreased.
As highlighted in this report by FATE Foundation, the pandemic had a severe impact on MSMEs. 94% of MSMEs reported being negatively impacted by the pandemic—particularly in the areas of cash flow (72%), sales (68%), and revenue (59%). However, corner shops, which are small neighborhood shops that sell daily need items were allowed to operate during the lockdowns and they served as the sole lifeline for local people.
L-IFT had been running a Financial Diaries research exercise in Nigeria since 2019. In that sample, we identified five corner shops and later included a sixth shop in April, 2020 for the global Corner Shop Diaries research. All these corner shops are located in the Edo State in Southern Nigeria. By the end of March, Edo State had started lockdown measures by limiting public gatherings to 20 people. By mid-April, a full lockdown was in effect, backed by containment strategies, such as closures of all interstate borders.
Using the daily financial transaction data from the diaries, our blog provides key insights about the financial life of corner shops and the impact of COVID-19 on them.
1. The COVID-19 pandemic had a severe impact on the income of corner shops, which was already volatile
The five corner shops in our pre-COVID sample vary in terms of the businesses they operate but all display similar volatility in income. Three corner shops sell groceries and daily provisions, one is a crayfish business, and one is a digital services shop. Examining the trends in the income of these shops in 2020 (Graph 1) highlights the volatility.
For five out of the 10 months, the combined monthly income for the five corner shops was more than 25% below their overall average monthly income—we can call these dips. The monthly income for three months was 25% more than the average monthly income—we can call these spikes.
We also see how external factors, as well as business-specific nuances, can affect income. The crayfish business, which started in January, 2020 has been very profitable and has seen big cash flows in regular intervals. The spike in July is mostly due to one such big cash flow. The second spike in October a result of panic buying by people as they feared a shortage of items caused by the END SARS[2] people’s protest.
If we zoom in on the data from March to June in the early months of the pandemic, the impact of the lockdowns[3] is prominent. As we can see in Graph 1, during the lockdowns, that is, April-June 2020, the income of the corner shops was at its lowest point. The crayfish business, which performed well during some stages of the lockdown, created the combined income spike in July 2020. Graph 2 highlights that the other businesses did not reach their pre-COVID level yet and even the panic buying during the END SARS protests in October did little to help them.
2. Depending on additional income sources, rationalizing expenses, and withdrawing savings were key survival strategies for corner shops during the pandemic
The COVID-19 pandemic emphasized the importance of multiple sources of income for a household. We saw that our respondents either picked up additional sources of income or started to depend more on their secondary sources of income. One of the respondents, who holds a salaried job, happened to have started the lucrative crayfish business just before the pandemic in January, 2020. She is the highest earner in terms of overall income among the corner shop diarists.
The respondent started this business after realizing her fixed employment was no longer enough to survive. This proved lucky for her. During the lockdown, which limited operating times at her workplace, shifts were implemented. Meanwhile, her salary began to diminish. She also offered crayfish deliveries during the lockdown, since she owns a car. Through this venture, she could reach more customers quickly and provide a convenient solution for them, who stayed at home to avoid COVID-19. The income from this crayfish business helped her to manage her finances at the peak of the pandemic.
The expenses of the corner shop owners (Graph 3) helps us understand some of the coping strategies they adopted and how their expenses changed during the pandemic. We can see an increase in expenses on food in March, which can be attributed to pre-lockdown panic buying of essentials. We then see a drop in April, when the lockdown was in full swing, and then a rise in May as lockdowns eased up. This gradually came back to the pre-COVID levels by September-October.
Understandably, we see a drop in religious expenses in April – May. This was the time during or just after the lockdowns and mosques and churches were closed. Although the lockdown eased slightly from May, the post-lockdown era came with its own new set of regulations with bans on religious and social gatherings still in place. However, around October, religious expenses seemed to have exceeded pre-COVID-19 levels.
Owing to the lockdowns, when nobody was permitted to travel, transport costs dipped during March. The month of May saw the gradual easing of lockdown restrictions, which allowed people to move and work again. Hence, we see a sharp increase in transport costs followed by a gradual stabilization and then further increases with further easing of the lockdown.
The cost of toiletries rose just after the lockdown (see the spike in May) as personal hygiene measures were a priority for most. Since toiletries, such as soaps and sanitizer were important for COVID-19 prevention and care, some shops bought and hoarded them in anticipation of their demand. However, during the June to August period, we see toiletry expenses dropping as a result of lower demand and an expectation for them to return to pre-COVID-19 levels.
The pandemic also forced the diarists to withdraw significantly from their savings. Data from the five corner shops—excluding the one that joined in April, 2020— indicates that the total savings withdrawn by respondents increased significantly between April-October, 2020 compared to August 2019-February 2020. The respondents reported that they withdrew NGN 354,000 or USD 928 in April-October, which is 66% more than their withdrawals in August 2019-February 2020. The crayfish business and a supermarket contributed the most in this owing to the increase in demand and the subsequent need to restock.
3. The savings patterns of corner shop owners correlate with their income
We observed that income and savings are correlated (correlation coefficient=0.5). Graph 4, makes it evident that the pattern of people making savings deposits mostly mirrors their income patterns. The only exception is in March, 2020, the month when lockdown started. This dip in March is likely due to the limited amounts that could be saved during the start of the lockdowns as businesses and their individual households needed more funds to stock up adequately for the COVID-19 period. During this time of uncertainty, people may have also preferred to keep their money in cash, ready for use, instead of saving the money.
Closing remarks
The findings highlight the reality of income volatility and celebrate the resilience of micro-businesses and LMI segments. Many observers expect the business of corner shops to remain unharmed as they were allowed to operate during lockdowns. Yet this is clearly not the case. They faced significant drops in income and have only gradually started to recover. We also see how multiple sources of income are extremely helpful during times like the pandemic. Adaze, who we met at the beginning of this blog, received substantially less income from her salaried job and her business also suffered due to reduced customer footfall. However, she and her business, along with many others like her in Nigeria survived in the long run and have been gradually recovering from the shock. And we can credit a nuanced research approach like the Diaries method to have uncovered a better understanding of the path toward recovery.
[1] A pseudonym has been used to protect the privacy of the participant.
[2] SARS stands for Special Anti-Robbery Squad, a former police unit in Nigeria feared for brutality. END SARS was a movement that protested against this police brutality and demanded the unit to be disbanded.
[3] In Edo state, the initial lockdown measures were announced by the Governor in 24th March and by April, 2020, a full lockdown was in place. The lockdown was eased in phases from May to June.
WRITTEN BY
Rahul Chatterjee
manager
Mhlalisi Ncube
PROGRAMME MANAGER
Anne Marie Van Swinderen
FOUNDER AND MANAGING DIRECTOR
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
‘Surviving a pandemic’: Five key insights from the Corner Shop Diaries research in India and Indonesia
‘Surviving a pandemic’: Five key insights from the Corner Shop Diaries research in India and Indonesia
Ishwar Sharma, the only bread earner in his family, runs a small café in a town in northern India. Meanwhile, Alus, a mother of two, runs a small grocery store in Central Java, Indonesia.
The COVID-19 pandemic and the “economic pandemic” that followed have brought Ishwar and Alus to the same point. These misfortunes had hit the businesses of both micro-entrepreneurs badly.
In Ishwar’s case, people become reluctant to buy his food and beverage due to health concerns, as he prepares the items he sells onsite. His troubles were compounded by the prolonged closure of businesses during lockdowns, which translated to fewer customers, alongside new competition from the reverse-migration by people returning from the cities who set up small cafes in his neighborhood.
As for Alus, her customers—mostly local farmers—became cash-strapped due to the significant drop in crop prices. Furthermore, the prices for basic groceries have surged during the pandemic (for instance, the price for cooking oil jumped 33% higher), and Alus’ customers had to either limit their purchase or pay for their groceries later.
Both micro-entrepreneurs are, however, striving to keep their businesses afloat.
MSC’s research on the impact of COVID-19 on MSMEs in India indicates that 73% of the businesses surveyed had reported a decrease in customer footfall. Meanwhile, three-fourths of the enterprises reported a decline in income. Meanwhile in Indonesia, 79% of MSMEs surveyed reported a drop in sales volume by a median of 50%; and 51% reported that they kept operating as usual but the overall number of customers per day had decreased by a median of 50%.
From October, 2020, MSC started to track the daily financial life of 25 corner shops each from India and Indonesia using the Financial Diaries methodology. We have collaborated with the social enterprise Low-Income Financial Transformation (L-IFT), to track the daily financial transaction of corner shops. These corner shops are small retail businesses located in neighborhoods that sell daily needs products and provide essential services.
The daily financial data of these shops generate intriguing insights into how these corner shops are in the process of recovering from the COVID-19 pandemic and the challenges they face.
In this blog, we discuss five insights from the early data of this research.
1. In India, owners of the small daily provisions store have become risk-averse and restricted their ambition.[1]
Varun Singh, father of two teenagers, runs a small daily necessities store in the north-west part of India. He mentioned during the interviews that his monthly gross income was INR 15,000 (USD 206) per month before the pandemic, which dropped to INR 8,000 (USD 110) per month during the pandemic.
The data that we collected in the past two months of 2020 indicates that he is yet to attain his pre-COVID level of business (see Graph 1).
Varun has been running his small shop from home although he wanted to buy or rent a shop in the market area. Despite difficulties, he wanted to grow his business. Yet the financial and health-related risks related to the pandemic have convinced him to postpone his planned expansion and continue operating from the current location.
Many corner shop owners in our sample also think along similar lines. Even though customer footfall has returned to normal, they are buying less compared to pre-COVID-19 times. Hence even if the income of the shops has picked up gradually, is still not what it used to be.
The financial stress and the experience of losing near and dear ones have made the corner shop owners risk-averse.
2. In Indonesia, many corner shops managed to maintain their regular income during the pandemic. For some, the pandemic helped to increase revenue.[2]
Hening, a young mother of two, runs a corner shop in Central Java. She sells staple foods, cooking oil, snacks, sweets, tobacco and cigarette, medicine, gas, and toys. She could maintain her usual sales revenue even during the pandemic (an average of IDR 30 million or USD 2,146 per month).
The data from the Diaries (Graph 2) indicates that Hening’s average monthly gross income is IDR 29 million (USD 2,074). It shows a drop in November, 2020 (Week 7) but only because Hening had to close her shop for around two weeks to help with some wedding events.
The revenue of Hening’s shop was soon back to normal—and even increasing—once she returned to the business (see Graph 2).
Hening has maintained her sales revenue during the pandemic by using some simple strategies. For instance, she stopped selling airtime as many of her customers often pretend they didn’t receive the top-up so they can refuse to pay –forcing Hening to cover the cost herself. As Indonesia did not restrict shop operational hours, Hening also kept her usual opening hours, that is, 6 am to 9 pm daily during the lockdowns. She also implemented hygiene protocols when the pandemic was at its peak by providing hand sanitizer outside the shop for customers’ use to make them feel safe.
Moreover, Hening has started to prepare better budgeting for her business and personal finance. She also uses her business data to map her income and expenses better and also allocated some money for saving.
Many corner shops in our sample adopted several simple strategies. These included following health protocols to make customers feel safe, prolonging operational hours to increase customer footfall, and reducing the number of staff members. The corner shops also adjusted their product or service mix to sell items in high demand or commanding a higher market price and stopped the sale of unprofitable or less-profitable items.
The strategies have helped corner shops to maintain their income or even make more profit than in earlier years.
3. Corner shop owners are beginning to think digital.[3]
In India, multiple corner shop owners, such as medicine shops, barbers, and cafés, among others, told us during interviews that they have started to accept digital payments, most commonly from PhonePe or Google Pay from clients during the pandemic. This phenomenon is mostly observed among younger diarists. We have also seen the use of messenger apps and social media to market products and services. Some diarists have also started to accept orders from regular customers through WhatsApp.
In Indonesia, we found multiple diarists using their WhatsApp and Facebook accounts to promote their business; mostly to generate awareness among customers about any new product or service they have started to sell. We also found that the micro-entrepreneurs use WhatsApp to communicate with suppliers. Some diarists use e-commerce sites, such as Shopee, Tokopedia, or Bukalapak to buy stocks at cheaper rates and sell specific products, such as plastic furniture. Only two of our diarists use digital payments to settle bills through ShopeePay, and pay suppliers and accept payments from customers through OVO and LinkAja. However, this had been their practice for a couple of years before the pandemic.
Many diarists were interested in using e-commerce in the future. Yet juggling between the brick-and-mortar shop and the online store requires time and energy. They also have concerns about the cost of internet data; hence they have become reluctant.
4. CICO agents in India saw increasing footfall but declining income during the lockdowns.
Our sample from India has three dedicated CICO agents and all of them mentioned that the pandemic has hit their businesses. These three CICO agents reported the total monthly net income of INR 38,000 (USD 521) before the pandemic, which fell by 24% to INR 29,000 (USD 398) during the pandemic.
The four major reasons for the decline in income are:
1. Reverse migration, which has decreased remittance;
2. Most withdrawals were small in value, which increased footfall but not income;
3. Worrying about cash crunch during lockdowns, many people withdrew their savings through the BC agents, thus creating liquidity issues for the agents;
4. Owing to mobility restrictions, agents could not travel to rebalance their liquidity, which also hampered the business.
However, the business has picked up now. Graph 3 shows the average monthly income of INR 40,108 (USD 550), which is similar to pre-COVID-19 times.
5. Women who own corner shops have faced unique challenges during the pandemic.
Social norms and caregiver responsibilities created an extra set of challenges for women who own corner shops. As traditional gender roles are still prevalent, we observed our women diarists struggle to manage their unpaid work at home and responsibilities at the shop.
One respondent from Indonesia mentioned that as schools are closed and children are at home, she struggled to manage her shop and the children. For another respondent, the extra pressure of earning for the household, since her husband lost his job, and fulfilling her duties as the caregiver made her life very stressful.
In India, a few women-owned enterprises reported that their husbands used to help them for tasks where mobility is required, such as withdrawing cash, repairing business assets, and buying supplies, among others. Yet the COVID-19 pandemic posed a challenge as their husbands had to work harder to earn money and could not help at their wife’s business.
To conclude, we highlight that financial conditions and the adoption of digital means are dynamic processes that change rapidly. One-off surveys can capture the situation at one point in time but fail to capture the transition and the volatility. Fortunately, the Corner Shop research can bridge this knowledge gap.
This blog is an introduction to the Corner Shop Diaries project, the first of a series that will be published regularly this year. We will also publish regular data-based insights on our website, and combine these insights with actionable recommendations for policymakers and practitioners.
This series will touch upon different themes, including the adoption of digital payments and e-commerce by micro-businesses, savings and loan products that they need, and their behavioral changes over time. Be sure to stay updated for more insights from us.
[1] 1 USD is equivalent to 73 INR
[2] 1 USD is equivalent to 13,980 IDR
[3] Findings from in-depth qualitative interviews with selected diarists in both the countries
WRITTEN BY
Rahul Chatterjee
manager
Anant Tiwari
manager
Manoshij Banerjee
assistant manager
Rahmatika Febrianti
assistant manager
Ira Aprilianti
assistant manager
Yani Parasti Siregar
associate
contact us
- aswinderen@l-ift.com | rahul.chatterjee@microsave.net | graham@microsave.net
- +31616162764 | +254-020 -272 4801 | +91-522-2288783
Recent post
.
- The CornerShop Saga
- Making digital transformation less daunting for rural corner shops
- Le bilan du Covid-19 – Un regard sur le parcours de Mohammad, propriétaire d’un petit magasin du coin au Mali.
- The COVID-19 toll – A look through the journey of Mohammad, a corner shop owner in Mali
- Wi-Fi voucher: A top-selling product for rural corner shops in Indonesia
Recent Comments