Evaluation of the impact of governmental subsidy on firms’ survival during COVID-19: Evidence from Senegal

ABSTRACT

The main objective of this research is to evaluate the impact of governmental subsidy during COVID-19 on firms’ survival and sales in Senegal. To address this issue, we use data from a survey conducted in 2020 by the University of Cheikh Anta Diop of Dakar. The data include 814 companies from various sectors in Senegal. Given the nature of the data, we use the propensity score matching method. Our results show that the government support program had a negative impact on company sales dropping in Senegal, although it did have a positive impact on the temporary survival of companies during the crisis period. These findings reflect the negative impact of the crisis on businesses, particularly small and medium-sized enterprises, and highlight the need for specific policies and programs to support businesses.

KEYWORDS:

• Impact evaluation
• subsidy
• COVID-19
• firms
• PSM

Availability of data and materials

The authors are prepared to share the data upon a reasonable request and subject to approval from the Development Policy Analysis Laboratory at Cheikh Anta Diop University of Dakar.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ According to this study, the rules for distributing aid were designed to prioritize relatively more productive, private, and foreign-demand-oriented companies over companies with an environmental footprint or zombie companies.