Ceren Baysan | 21 September 2021
One of the primary ways that immigrants integrate with a new country is through work. Businesses, and the industrial structures within which they operate, thus play a central role in providing the opportunity for recent arrivals to earn a living while contributing to the local economy with skills, information, or new market opportunities.
Our field work in Gaziantep (Antep), an industrial city in southeast Turkey with a large share of Syrians, involves understanding the role played by small and medium-sized enterprises (SMEs) in the economic integration of refugees into the host community. Antep hosts more than 450,000 Syrians, and refugee-owned businesses have grown in recent years to comprise approximately 10% of all formally registered businesses in the city.
While our field work was slated for kickoff in early 2020, we were forced to suspend our in-person meetings and surveys due to Covid-19. To maintain progress, we relied on a set of connections we made during the initial stages of the project with the business community in Antep to implement phone-based surveys of businesses. These phone surveys had a dual purpose: to understand the business environment for refugee-owned firms during Covid-19, as well as to assess data quality collected via phone in this context. In June and October 2020, we surveyed a random sample of 123 businesses from Syrian Economic Forum’s registry of Syrian businesses that were actively operating in February 2020. Each respondent was provided US$3 as compensation for participating in the surveys. While phone surveys may be seen as less ideal than in-person survey enumeration, we were surprised by the high response rate (70% for both June and October) and the overall willingness to engage with us regarding business operations and difficulties. We learned that making the structured part of the phone survey short (around 15 minutes), while leaving room at the end for additional thoughts, comments, and observations from the respondents, gave us a greater depth of information and learning about the context than we might have expected.
Despite the small sample size, these data provide valuable information on the resilience of small firms in response to the negative economic shock during this time. Below we summarize the highlights of our effort to characterize the challenges faced by refugee-owned businesses in Gaziantep during the pandemic. We compare the differences in answers to the same questions by the same business owners between July and October 2020 to understand the direction in which local businesses are affected during the pandemic and recession.
According to our survey in October 2020, more than half of the refugee-owned firms in our sample in Gaziantep employ at least one worker, with an average of 4.6 workers per firm.
Syrian firms show diversity in what they produce and sell, which include export-oriented industries such as trade and textiles as well as tourism, and more than one third of firm owners in our baseline sample have at least a university degree and close to 40 percent speak some Turkish. These characteristics might explain the high survival rate of firms in our sample during the pandemic. However, our ongoing work seeks to establish a comprehensive sampling frame that is fully representative of the refugee-owned business in Gaziantep.
Based on the phone surveys, we found that 83% of SMEs that were operating in February were still operating as of July, and this slightly increased to 88% as of October 2020. Between July and October, we found that the percentage of business owners who reported lower sales decreased from approximately 70 to 50%. Overall, all factors explaining reduced sales improved by more than 20 percentage points; including, access to capital (25 percentage points or pp), lower consumer demand (27 pp), worker absenteeism (36 pp), and difficulty in devoting time to business (43 pp). The only outcome that deteriorated between July and October was the share of business owners reporting a reduced supply of input. This worsened from 75 to 92%. While most indicators of business performance improved, we found that business owners became more pessimistic about future sales.
To summarize, our data suggest that refugee-owned firms were relatively resilient during the ongoing major economic downturn. The business climate improved from July to October 2020, even though limited access to markets, especially the constraints on capital access, make the effect of economic volatility stronger among these firms. By remaining apprised of the experiences of the business community, phone surveys appear to present a low-cost, scalable way to collect a set of targeted indicators that can help governments adaptively respond to socio-economic crises like the current one caused by the pandemic. This, in turn, could allow governments to formulate tailored policy actions to support a subsegment of industry to the benefit of the broader economic ecosystem.
Ceren Baysan is an Assistant Professor of Economics at the University of Essex. She is the principal investigator of the project in Turkey.
The project was partly funded by CEDIL and continues to be funded by the Innovations for Poverty Action (IPA). The blog draws on a summary developed for IPA.