Reduced opportunities to meet new customers, a drop in demand and a lack of cash flow.
These scenarios are the best description of what companies are going through due to covid-19 pandemic which is now headed into its ninth month since it was first declared in Wuhan, China in December 2019.
Companies have faced serious disruptions in both supply and market due to the pandemic with unfair pricing seen as a major concern.
The Economic Commission for Africa (ECA) and the International Economics Consulting Ltd have released a report of the second comprehensive survey on the covid-19 pandemic and its economic impact across Africa.
Conducted online from 16 June to 20 July, the survey was meant to provide insights into the effects of the pandemic on economic activity for businesses on the continent and identifying the challenges they face and their responses to these hurdles.
The survey results show that despite the hype about government bailout plans, nearly two-thirds of the companies polled show that government assistance is a mixture of goodies. These companies said that they experienced moderate to no satisfaction with the governments’ way of dealing with the crisis.
The survey notes that as a consequence, 50 per cent of the respondents who approached financial institutions experienced disappointment with how the financial needs were addressed.
Some 25 per cent of the respondents said they got positive responses; 42 per cent of which were not satisfied with the service due to high interest rates, delays and/or collateral requirements.
To turn around their fortunes, companies are currently working at about half their capacity when it comes to their performance.
Projections show that company revenues are expected to drop by about 18 per cent in 2020 in comparison to 2019 while lay-offs will increase by 20 per cent in the next three months.
On the brighter side, the situation which could have been worse is ameliorated by the fact that a significant share of employees at 27 per cent was able to work remotely.
The Micro, Small and Medium Enterprises (MSMEs) which employ a majority of the workforce in Africa, however, found it hard shifting to working from home.
Remote working options proved more challenging especially for MSMEs dealing with goods, whose performance has been relatively more negatively affected than larger-sized companies and more generally those involved in services.
Gender-wise, women are more at risk of being laid-off than men, which is consistent with the fact that, from interviewed companies, women tend to be employed more in MSMEs in which their primary business is related to goods.
The survey shows a positive outlook due to the fact that two-thirds of the surveyed companies indicated that they have identified new opportunities in response to the crisis.
“Very interesting to note that firms involved in goods and MSMEs are displaying the highest shares in terms of new opportunities identified following the crisis, which in turn is expected to be positive from a gender point of view as women are primarily engaged in MSMEs dealing with goods,” said Simon Mevel, Economics Affairs Officer at the Regional Integration and Trade Division in ECA.
Those opportunities attest to a clear shift towards new technologies, particularly the development of online platforms for e-commerce.
There is a huge potential in e-commerce growth on the continent since the sector current claims a relatively small share of e-commerce revenues at 16 per cent. This is attributable to the challenges that come with internet connectivity, payment gateways and logistics/transport/deliveries.
Noteworthy, though, is that nearly half of the companies, at 47 per cent, are moving or planning to move towards innovative/digital solutions through collaborations and partnerships.
A prior survey in April this year showed that business closure was reported as the major challenge faced by companies.
The current challenge of reduced customers is a positive one since it shows that businesses have resumed operations and which could determine the future economic standing of the continent.