Giving Compass' Take:

• New research from the Aspen Institute and Dalberg Advisers indicates the severity of COVID-19 on small businesses in Latin America, Africa, and Asia. 

• Matthew Guttentag points out that international institutions and donors (both public and private) could help by offering flexible capital targeted toward small, struggling businesses. How feasible is this for individual donors? 

• Read more about the future of small businesses in the wake of COVID-19. 

As American small businesses continue to be squeezed by the fallout of the COVID-19 crisis, it is increasingly clear that the approximately $659 billion already committed by Congress won’t be enough. It is similarly unlikely that unprecedented spending by governments will be enough to turn back the tide in Europe and elsewhere. But as bad as things are for the private sector in the wealthiest nations, an even greater disaster looms over the small and growing businesses that represent the economic engine of the developing world—with no bailout in sight.

Small businesses account for the vast majority of jobs in the developing world, but it is the growth-oriented subset of these businesses that account for a disproportionate share of the net job creation and economic growth that is vital for moving these countries up the income ladder. While all types of businesses need support to withstand the social restrictions and economic fallout of the crisis, small and growing businesses that represent a particularly important target group: small enough to have relatively modest short-term capital needs, but with growth trajectories that will ultimately create the jobs and growth needed for the economic recovery.

New research from the Aspen Institute and Dalberg Advisers shows just how perilous the situation is for these businesses in the developing economies of Latin America, Africa, and Asia. Organizations supporting them estimate that 42% have a very high likelihood of going under due to the crisis. While only six percent had already shut down as of early April, over two-thirds have already laid off staff and nearly half have experienced greater than 50% revenue loss.

Unlike in the US, many of these businesses are unlikely to expect more than very minimal government support.

Read the full article about looming business crisis in the developing world by Matthew Guttentag at The Aspen Institute.