COVID-19: 40% of EAC businesses uncertain

By Nicole Kamanzi M.
On 5 May 2020 at 01:27

A survey conducted by the East African Business Council has established that over 40 percent of the businesses in the East African region are not certain of their business continuity six months from now due to the COVID-19 pandemic.

The survey showed that the ripple effects of COVID-19, including measures to curtail its spread, have created substantial uncertainties for businesses that could bring forth the closure of business and investments.

41.2 percent of the respondents said that their businesses may not be sustainable for more than 6 months while 29.4 percent said their businesses may sustain between 6 months and 1 year; only about 11 percent of businesses said their business will attain seamless continuity for between one and two years if the situation of COVID-19 pandemic continues.

The business council says that the challenges could be prevented through the planned stimulus packages for most affected businesses as well as the central bank’s lending facility to commercial banks.

Rwandans are awaiting a new special fund for business recovery in May which, it is expected, will boost further liquidity in the financial market.

The uncertainty further poses challenges to employment across the region, risking undoing any gains made over the years.

45.5 percent of enterprises in the region are yet to decide on the fate of their staff in regard to lay-offs.

36.4 percent have decided to lay off staff and 18.2 percent said they will not lay off their staff. Laying off of staff will have multiple effects on EAC economies including a decline of disposable income and consequently reduced consumption; reduce consumption means that industries would, in turn, produce less, source less raw materials.

The organization led by Peter Mathuki said that the EAC should consider temporary removal of employment taxes/levies, skill development levies.

This, they said, will encourage employers to retain the existing workers and do away with downsizing in the midst of COVID-19 pandemic.

Among the top effects the pandemic on businesses in the region are; decline in sales, increased cross border restrictions and challenges to source raw materials, reduction in the export market, laying off staff, delay of contracts, and reduced spending behaviours.

40 percent of the businesses in the East African region are not certain of their business continuity six months from now due to the COVID-19 pandemic.

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