Expert article
Edit 19 December 2020
by Rossella Soldi

UFIL and the COVID-19 outbreak: challenges and opportunities.

FAQ
FAQ
UFIL is designed to create innovation and to impact at the socio-economic level. The project tackles job creation and development of new businesses in the forest bioeconomy domain and puts tutoring and interaction at the core of its innovation development process. As COVID-19 pandemic has importantly affected economies and societies and has obliged all of us to re-think the idea of ‘interaction’, it is evident that not only the implementation of UFIL has been disrupted but that also the project’s potential to impact is now questionable. This article discusses this second aspect by highlighting some of the challenges and opportunities for business development brought by the COVID-19 crisis in the province of Cuenca. The discussion benefits from the insights provided by Raquel Alvarez Torres from the Business Confederation of Cuenca (CEOE), one of the project’s partners.

The incidence of COVID-19 in the province of Cuenca and its impact on business development

In mid-October 2020 and since February 2020, the province of Cuenca has recorded about 4,057 COVID-19 cases. This represents 0.5% of the national infections and 8% of the infections of its region, Castilla-La Mancha. Thus, the province is not among the worst-hit territories of Spain. Still, at the project's implementation level, the first wave of the pandemic obliged UFIL to suspend the activities of its innovation lab while complying with the lockdown measures and provisions decided at the national and regional level.  The project’s campus, hosted in the Institute of Technology of the University of Castilla-La Mancha, in Cuenca, was interrupted around mid-March 2020. Training activities were then resumed in remote modality. In mid-September, after the summer break, the project’s lab reopened and training activities in presence restarted - but alternated to online sessions in order to comply with still existing restrictions. The campus is expected to continue running this way up to the end of January 2021 unless new limitations to educational activities in presence are decided at the policy level. It is a fact (clearly shown in the chart below) that, similarly to the rest of Europe, the province of Cuenca is now experiencing a second wave of coronavirus spreading (source: official data online).

casi covid cuenca

 

At the business community level, composed for the most by micro and small enterprises (in 2018, the province counted 13,655 companies, out of which 93% had less than 5 employees), business development suffered from the social and economic restrictions imposed since March 2020. Raquel Alvarez Torres from the Business Confederation of Cuenca (CEOE), one of the partners in the UFIL project, reports that in April and May 2020 only 13 commercial companies were established in the province of Cuenca - while they were 51 in the same months of 2019. In addition, she mentions that ‘something similar has happened with the number of self-employed who are 510 fewer in April 2020 than a year ago according to the data published by the Social Security, which means loss of productive fabric’.

Data are still preliminary to know which are the most affected sectors by the economic downturn caused by the pandemic. Production activities in the primary sector (i.e. forest and agriculture) were not stopped by the lockdown, still they were damaged as a result of reduced demand (export and local consumption). Instead, the tourism industry – which is very important in the economy of the province – was almost fully halted because of the restrictions imposed since March 2020, and activities such as hunting, fishing and hiking were cancelled.

Also, data are still insufficient to assess the impact of COVID-19 on the survival rate of businesses as their closure may have been simply postponed because of the support provided by governments. For example, the Region of Castilla-La Mancha was early in preparing at the beginning of May an Extraordinary Plan of Measures initially valued €127 million and including a nonrefundable financial aid of €25 million for those SMEs and self-employed which resumed their activities and retained their employees at the end of the lockdown. 

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When asked about the potential consequences of the COVID-19 crisis on the implementation and results of UFIL, Alvarez Torres noted that adaptation is necessary for UFIL as it is for any entrepreneur/sector. This adaptation will have to be reflected, for example, in the business plans of the trainees’ ideas which are currently nurtured in the project’s innovation lab. In addition, Alvarez Torres highlighted the importance of considering the opportunities created by the COVID-19 crisis, and in particular:

  • Rural areas have now the chance to become more attractive to future entrepreneurs as as they are considered safer than urban areas.
  • The need to run the training in a remote modality has emphasised the power of digitization for business idea development and this same power shall not be undervalued by trainees for future professional purposes such as reach out to potential customers, opening of new niche markets, and regular dealing with clients and suppliers.

 

On top of the two opportunities mentioned above, it is likely for the productive fabric of the province of Cuenca, characterised by the prevalence of SMEs and of self-employed, to be sensitive to economic fluctuations. And these fluctuations look promising in the near future due to the resources mobilised at the EU level for the social and economic recovery of territories. Spain, as one of the worst-hit countries in the EU, has been (theoretically) allocated some €140 billion in this sense. On top of this, there are novel investment initiatives and more flexibility is granted in the use of the European structural funds. Indeed, UFIL may take advantage of this unprecedent injection of resources as it finds itself well-aligned to some of the ten priorities set by Spain for the near future (source: Gobierno de España website). In fact, according to the recently presented recovery plan ‘España puede’, the project is able to contribute to at least the following national goals:  

 

  • Combating depopulation by improving both rural and urban environments.
  • Investing in resilient infrastructures and ecosystems. 
  • Promoting renewable energy.
  • Modernizing companies, including through digitization, and recovery of the tourism sector.
  • Investing in human capital by supporting education and knowledge, continuous training and capacity building.

 

In practice, the two main opportunities which are spurring from the COVID-19 crisis are:

  • The pandemic has managed to mobilise unprecedented resources that may favour those initiatives like UFIL that are aligned to the priorities set by national and regional governments for recovery and resilience. These resources include new funds but also new investment initiatives and higher flexibility in the use of the European structural funds.  
  • The COVID-19 pandemic has given a sort of positive label to ‘remoteness’, a condition which was so far negatively perceived by the most. In fact, remote areas have become safer places than urban areas to live and work. And remote working has turned out to be not only possible but also necessary to keep people employed and businesses alive.  The City of Cuenca may take advantage of this new and positive perception.

As mentioned, it is too early to quantify the socio-economic impact of the COVID-19 crisis on the city of Cuenca and its province. At the time of writing, the pandemic is once again spreading across the EU obliging several countries and regions to impose new restrictions to their citizens and businesses. But if the impact is unclear, it is also true that the pandemic brought in the need for change. The figure below summarises the opportunities which may originate from this crisis as side-effects of the pandemic. These opportunities are outlined against the city’s development challenges which are tackled by the UFIL project.

It is evident that, at the end of the day, these opportunities may facilitate the project in achieving its objectives and may strengthen the project's potential to impact.

 

           City’s development challenge               Opportunities as side-effects of the pandemic

challenges and opportunities

 

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