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Impact of COVID-19 on Small Businesses in Africa – Surviving the downturn



By Emmanuel Allottey


The World Health Organization (WHO) first declared COVID-19 a world health emergency in January 2020. This outbreak has also caused a global economic slowdown for most economies in the world. Trade, investment, growth, and employment are all affected in many African markets. African governments are forced to intervene through monetary and fiscal policies to sustain economic activity.

Over 90% of Small Businesses operations will be affected by the implementation of widespread restrictions on social contact to stop the spread of the virus. The impact of COVID-19 on Small Businesses include insufficient cashflow to keep the business operational in the next 3 months, reduction in revenue and inability to meet short-term and long-term obligations.

To survive the downturn, Small businesses need to consider taking the following actions:

Re-organise the Business cash flow: the downturn has created a mismatch in business revenue to expenses. It is important to ensure the business has adequate cash to meet its short-term obligations as well as longer term commitments. Businesses need to engage their Financial providers, Suppliers, Landlords and other creditors to negotiate on the terms of their obligations. Financial Institutions are offering relief packages to businesses affected by COVID-19 and this offer should be explored.

Intensify Sales Opportunities: this is the time to explore alternative channels to distribute products or services to customers. This could be through the use of digital marketing tools such as Online presence, Social media or through collaboration with another business to jointly sell your products.

Prepare for the Future: Economies and businesses operate in cycles. Economic activity will resume, and business will begin to boom again eventually. Businesses need have their operations ready for the next cycle. This could be through future looking, supplier agreements, delivery arrangements and even having potential future employees that are available to join the business to support increased activity. This downturn will come to an end and businesses that are well positioned will be at an advantage. The need for preparation is crucial to avoid disappointment of customers and inability to fulfil orders.

There is no way to tell exactly the extent of the economic damage from the global COVID-19 novel coronavirus pandemic will be; Small Businesses in Africa can survive the downturn by taking making the right decisions. Consult your financial service provider to explore how to position your business to survive.

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