Businesses must weather the Covid-19 whirlwinds
THE urgent health crisis that is COVID-19 has created a historic recession with record levels of deprivation and unemployment, creating an unprecedented human crisis that is hitting the poorest hardest, especially women and children.
Indeed for Namibia and all other African economies, there will be no return to the “old normal,” and the collective responsibility for the private sector and government to create jobs beckons.
With full acknowledgement, issues like fragile healthcare systems, food insecurity and large informal economies make this much more than a massive health and economic crisis. COVID-19 is a fundamental development crisis for Africa.
Notably, a recent McKinsey report highlights the extensive impact of COVID-19 on Africa’s economies – noting the slowdown in economic growth, job and productivity losses, and bankruptcies. Importantly, the analysis also notes that school and university closures will impact future human resource capacity and are likely to particularly impact girls, some who may not return to school.
Also on the other hand, the African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA) and International Economics Consulting Ltd., jointly carried out the first comprehensive survey on the COVID-19 pandemic and its economic impacts across Africa in mid-April. There were 210 respondents, made up of a mix of micro, small, medium and large enterprises from across the 54 African countries. The results have highlighted the major challenges that firms are facing due to the current crisis.
Many companies have expressed their concern about the direct impact on company turnover, with the smallest firms expecting to be hit the hardest. The lack of operational cash flow, lower capacity utilisation, disruption in supply chains and decrease in demand may force some businesses to close down, with obvious adverse effect on workers, finds the survey.
The survey also finds that access to credit is elusive to businesses of all size, with less than two fifths of requests being granted, while one to two thirds of loan requests are not even offered a response. The hardest hit, again, being the smallest companies. Across the board, enterprises have also signalled their disappointment with their own government responses to the crisis.
While this is so, it is imperative that businesses move strongly to weather this storm as economies start to partially open, Namibia being one of those.
This is no easy feat but what we have already seen is that the lack of external support has forced companies to come up with novel ways of conducting business. A number of effective measures have been adopted by businesses to mitigate the effects of operating in this new environment, such as adopting technology, working remotely and using e-commerce. These measures could be used as stepping stones for a progressive business community that can come out of Covid-19 different but stronger.
As a result of the country-wide lockdown, there has been an almost immediate shift from traditional methods of business and retail to a world that’s completely online.
This proves that technological flexibility is fundamental in remaining relevant in a fast-changing world. While digesting the recent events and embracing a new reality and outlook on the future might seem challenging right now, adaptability is probably the most important trait any business can have at the moment.
With this in mind, responsible authorities must remember in this time that protectionist policies at the best of times and most certainly during times of crisis are not advisable. The reality is that if all adopt such beggar-thy-neighbour policies, we will all lose. This will only serve to deepen the crisis and make recovery more difficult and costly.
Conclusively and without protectionist policies, firms will judge the short-term outlook on revenues to be severe, but will remain more optimistic over a longer time horizon (one year or more).