During the first four months of the coronavirus pandemic in Mexico, 150,000 small corner stores had to close permanently, the National Alliance of Small Merchants (Anpec) reports.
In a video conference, Anpec president Cuauhtémoc Rivera explained that low sales due to stay-at-home measures and reduced income have forced many small businesses to shut their doors for good.
Rivera said small convenience stores have seen a 25% reduction in sales yet the government has not effectively stepped in to help them survive. He estimates that 21% of Mexico’s corner stores have been forced to close.
“We have suffered the ravages of this invisible threat which has severely damaged the country’s economic activity,” Rivera said. “In April alone, 1,144,000 jobs were lost,” he added. “There has been a loss of more than 16 million jobs so far this year, and that has put pressure on consumption.”
Although the government has launched programs offering small loans for businesses, Rivera says it has been insufficient. Around 89% of the businesses he represents have been left with insufficient resources to meet basic expenses such as utilities.
A survey conducted by Anpec, which has 95,000 members, revealed sales are down by an average of 64%, and 80% of shop owners said their customers do not have enough money to stock up on products and are living hand to mouth.
In late April, the federal government implemented two programs to support small businesses. The first was a program managed by the Mexican Social Security Institute that offered loans of 25,000 pesos (US $1,100). Only 200,000 were issued, falling well short of the government’s goal of aiding 650,000 businesses under the program.
Experts cite two reasons for the lack of enthusiasm in the program, one being the low amount offered, and the other that many businesses were unable to meet the government’s stipulation that they maintain staffing levels during the coronavirus crisis.
The other program, Crédito a la Palabra, or “Word of Honor Loans,” is administered by the Ministry of Economy and is nearing its goal of granting 1 million 25,000-peso loans mostly to informal, small business operators who have registered with the census bureau.
According to Anpec, what small businesses need are attractive, revolving loans and constant lines of credit.
“This policy of supporting small and medium businesses was not successful due to the amount, because 25,000 pesos is not a figure that will get you out of trouble. The level of pressure that businesses have is much higher,” Rivera said.