Investigating Financial Resilience and Survivability of SMEs in Africa: A Panel Study




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Institute of Small Business and Entrepreneurship



Peer reviewed



Aim of the Study The unprecedented economic crisis created by the COVID-19 pandemic has renewed the debate on SME resilience in dealing with such pandemics and other business shocks. SME resilience largely depends on the financial capability of the SME as well as the presence of various environmental factors serving as coping mechanisms. Thus, financial capability supports the ability of the SME to adapt to both internal and external shocks, which usually forms an integral part of an organisational resilience strategy for survivability. Methodology Through a deductive research approach, this study adopted a longitudinal research design using twelve (12) year secondary data on five (5) predictors of financial resilience, namely public policy, specific tax policies, SME training, R&D, and accounting and assessment services for 20 African countries. A two-stage hierarchical Multiple Linear Regression (MRL) was executed to test five hypotheses relating to SME financial resilience in Africa. Contribution Our evidence indicates that effective public and tax policies, R&D, and accounting and assessment services significantly promote the financial resilience of SMEs in Africa. However, SME tailored training is statistically insignificant in creating financially resilient SMEs. African governments are therefore expected to augment training and capability programmes towards the creation of sustainable SMEs because African SMEs are financially fragile due to the weak institutional and technological environments in which they operate. It is, therefore, recommended that African SMEs build their internal capacities, particularly in developing their 2 human resource capacities for effective decision-making, which is crucial during pandemics and business shocks. Implications for Policy Firstly, this study has developed an efficient and robust framework that can be adopted in sustaining the operations of SMEs in serious pandemic situations in Africa. Therefore, governments in Africa should ensure that their SMEs are supported with effective policies that aim at strengthening capability and skill development, making research findings available to SMEs, and implementing friendly taxation and regulatory policies coupled with the streamlining of accounting and assessment services. Implications for Practice Investing in SME survival has a tremendous benefit for African economies as well as for individuals and their families (Chavis et al., 2009). To this end, increased financial resilience promotes SMEs' survivability which eventually improves the productivity levels of SMEs and their survival (Xue & Klein, 2010). It is equally important to emphasise the immeasurable role of the market dynamics regarding demand and supply relationships in accessing the right information for competitive advantage development, as indicated in the strategic factor market theory (Barney, 1986).



Adaptability, Covid-19, Capacity, Institutions, Resilience, Survivability


Atiase, V.Y., Agbanyo, S., Gnaza, P., Sambian, S. and Ameh, J.K. (2022) Investigating Financial Resilience and Survivability of SMEs in Africa: A Panel Study. Presented at the 43rd Annual Conference for the Institute of Small Business and Entrepreneurship, York, October 27–28, 2022


Research Institute

Finance and Banking Research Group (FiBRe)