THE Business Survey Report on the impact of COVID-19 on Zambian enterprises has revealed that 38 per cent of businesses in the country had their revenues reduce by 50 per cent due to the pandemic, with four per cent having to completely shut down.
The Survey, which was unveiled by the Ministry of Commerce, Trade and Industry, with support from the United Nations Development Programme (UNDP), revealed detailed the effect of COVID-19 on Zambian businesses.
“Most businesses lost a significant percentage of revenues; 38 per cent more than 50 per cent, while four per cent of the businesses stopped operating completely. Only one per cent of businesses across the sectors estimated an increase in revenue per month whereas five per cent of businesses received similar revenues as before. About 38 per cent of the businesses had revenue reduction of more than 50 per cent and around four per cent of the businesses stopped operating completely. Around 51 per cent of the business surveyed had their revenue reduced by not more than 50 per cent. Some have no change in revenue earning (at 4.96 per cent). While 1.13 per cent of the respondents actually had an increase in revenue; 36 per cent of businesses in the catering and accommodation sector estimated a 90 per cent reduction in revenue per month whereas 33 per cent of businesses in the tourism sector also estimated a 90 per cent reduction in revenue,” the Report disclosed.
“Further, 20 per cent of businesses in the human health and social work sector anticipated a 10 – 50 per cent increase in revenue per month followed by the manufacturing sector with 11 per cent of businesses anticipating a 10-50 per cent increase as well. However, 31 per cent and 28 per cent of businesses in the education and tourism sectors, respectively, closed their businesses completely during the pandemic. Meanwhile, 25 per cent of businesses in the energy sector estimated an increase in revenue of above 50 per cent.”
The Report noted that Muchinga Province was the most affected area with 45 per cent of businesses completely shutting down.
“Muchinga Province was mostly affected by the pandemic (COVID-19) with 45 per cent of businesses in the province having had totally shut down the operations. Lusaka Province was second as about 22 per cent of the businesses in the province having had to shut down their operations. Southern Province had the least effect in terms of the businesses as it had less than two per cent of the businesses shut down. Most businesses across the provinces partially shut down their operations,” the report narrated.
It further stated that the transport and energy sectors hired the highest number of employees with the agriculture sector also following suit.
“8.1 per cent of the businesses in the transport and storage sector hired the highest number of employees during the period, followed by mining and quarry, which recorded 3.1 per cent of the business reported having hired employees during the period. The business in the agriculture sector also hired employees at 1.8 per cent. The rest of the businesses in other sectors reported not to have hired any employees,” it stated.
And among the recommendations, the Survey participants recommended that government should put up deliberate policies that would ensure continuity in the event of further disruption to the local economy.
“…Set up a coordinated policy package to address the current challenges. In view of the challenges experienced as a result of the COVID-19 pandemic, it was noted that there is need for government to put up deliberate policies that will ensure continuity in the event of disruptions in the economy. Specifically, government should: (a) Analyze relevant policies on public emergencies, selecting and classifying them according to time horizons (short-term, medium and long-term) and type (fiscal, financial, service improvement, etc.); (b) Develop and implement policies that support access to affordable financing and flexible payment periods, timely payment to suppliers of goods and services by government, and offer relief from payment of statutory obligations (ZRA, NAPSA and Council Levy) during emergency times; this was mentioned by 35.7 per cent of the respondents as an urgent need; and (c) Ensure thorough consultations with all relevant institutions when developing an emergency policy response, such as the K10 billion stimulus package aimed at providing medium-term liquidity facility to help enterprises cope with the pandemic,” it read.
“The Report notes the need to establish clear modalities on how the policy measure will be implemented; (ii) ensure timely implementation of policies to achieve greater impact. According to the findings, many Zambian businesses have reduced their operations affecting their cash-flow, which calls for urgent and timely government support to prevent these companies from collapsing.”
It further recommended that enterprises should actively study and capture changes in market demand and take actions promptly to reduce negative impacts by rapidly adjusting their manufacturing plan and sales strategy.
“Enterprises should actively study and capture changes in market demand and take actions promptly to reduce negative impacts by rapidly adjusting their manufacturing plan and sales strategy. For instance, some companies have voluntarily shifted to manufacturing Personal Protective Equipment (PPEs) supplies, benefitting both themselves and society. Others have also been speeding-up their business transformations to adapt to consumer preferences and competition patterns that may change after the pandemic. (ii) Streamline businesses and reduce costs rapidly. When confronted with sudden crises, enterprises should take timely measures to preserve cash-flow. For enterprises suffering from heavy losses, measures such as telecommunication, employee time-sharing and stimulating employees’ creativity for new business models should be fully explored before considering layoffs and salary cuts. (iii) Enhanced risk management. The pandemic has highlighted the importance of risk management. Therefore, there is need for enterprises to have a sound risk management to prepare to cushion the adverse effects of future emergencies. Furthermore, there is the need to apply the Government’s Standard Operating Procedures per Sector that preserve health and safety of workers and customers in the context of COVID-19 as restrictions are being lifted,” read the Study.
The Report was published with the aim of gathering data that will inform policy decisions to enable more businesses thrive during the pandemic period.
It equally highlighted some of the challenges that businesses faced and the impact on their viability as some completely closed due to the impact that COVID-19 had on their cash-flows.