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MCCCI sees bumpy future for businesses

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The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has forecast the year 2021 to be a challenging one for businesses, saying the duration and extent of devastation of the second wave of Covid-19 could not be estimated with precision.

In its assessment of the business environment in 2020 and outlook for 2021, the chamber has predicted that the business environment would be more challenging, especially in the first half of the year.

The assessment report, co-signed by MCCCI President James Chimwaza and Chief Executive Officer Chancellor Kaferapanjira, says, going forward, concerted efforts are needed to constrain any further spread of the virus through stringent public health measures, while providing targeted monetary and fiscal incentives to sustain the core economic activities in the informal, manufacturing, small and medium enterprises, and hospitality sectors that would ensure household food, nutritional, and income security, as well as improved resilience.

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Looking back to 2020, the private sector mouthpiece says Covid-19 exacerbated the already hostile doing-business-environment which continued to chock business operations in 2020.

It says the measures imposed to combat the spread of the pandemic—such as social distancing, lockdowns, transport and passenger travel restrictions, curfews, cessation of movement of people, closing of schools, limiting hotel and restaurant operations, restricting non-essential trade, government ‘work-from-home’ orders and reduction in operating hours all led to reduced business activities and work force productivity, especially during the second quarter.

“The impact on firms was quite mixed across sectors. Generally, small and medium enterprises were more concerned about reduced cash-flows and fell into the risk of closing down due to the Covid-19 pandemic. At the same time, large firms equally bore the brunt of the pandemic, especially air transport and tourism operators. In these firms, the concern was largely how to change the business strategies and meet new customers.

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“The industry sector was hit the hardest, with its value added falling by 15.2 percent, followed closely by services (-14.8 percent).However, because of the relative sizes of the two sectors, services were by far the most affected in absolute terms with estimated losses of $155 million over the two months’ period (April and May) compared to $48 million in industry,” the assessment says.

MCCCI further observes that companies in the manufacturing and hospitality sectors faced difficulties related to sourcing of key inputs, maintaining pre-Covid-19 productivity levels, meeting their near-term financial obligations and honouring the agreements they signed up to, like Escom’s premium electricity charges during peak hours and maximum demand charges.

Larger manufacturing firms, according to MCCCI, were the most affected owing to their stronger reliance on supply of raw materials from global and regional supply chains as opposed to smaller firms.

“Most firms closed down or scaled down production thereby rendering thousands of people underemployed or unemployed. The most affected were less-skilled, lower-income and informal workers and the majority of the casualties came from retail/wholesale businesses, transport sector, and entertainment/hospitality industry. For instance, the hospitality industry alone shaded 50 to 70 percent of jobs from its pre-coronavirus level of 526,000 jobs.

“Despite the challenges, the pandemic also created opportunities for firms to innovate, develop new strategies and products such as sanitiser dispersers, etc. Furthermore, firms offering IT-related services experienced boosts in business due to shift to on-line transactions,” MCCCI says.

Government on Thursday announced that it would reinforce tough measures for preventing the spread of the pandemic.

Among others, Secretary for the Homeland Affairs Kennedy Nkhoma said police officers, both in uniform and civilian, would be checking all public gatherings to make sure that the gatherings are controlled.

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