EFFECT OF COVID-19 ON ENTREPRENEURS
Introduction
A global pandemic has gripped the world and turned the world as we know it upside down. When staring in the terrifying face of COVID-19, no one is safe, and everyone’s reality has been affected. It’s not just millions facing a huge health crisis rather this pandemic has caused the global economy to take a nosedive. If we focus on the impact of COVID-19 on Pakistan, the reality is that the strides taken by Pakistan in reduction of poverty and towards some social indicators has been severely affected.
Effect of the Covid-19 pandemic on local businesses:
Pakistan is a developing country and has faced the brunt of the impact of a global pandemic. With the second lockdown being imposed on the country, businesses have been left to suffer. Because of the Covid-19 pandemic Pakistan has been expected to suffer a loss of up to Rs 2.5 trillion in current fiscal year. Furthermore, the Pakistani government released figures which predicted the loss of about 3 million jobs in face of this global pandemic (Shafi et al., 2020).
The pandemic has caused various businesses to close down and affected the jobs of thousands in Pakistan. However a welcome shift has been made in various businesses. The pandemic has forced my businesses to make the shift online enabling an easier convenience for customers. With social distancing and a lack of customers at physical stores, business has picked up online due to the innovative thinking of businessmen. Local businesses have grown quite popular as well since the native population is relying on convenience and not traveling too far to get day-to-day essentials allowing local businesses to boom.
Due to the rapid wide spread of corona virus disease, a lot of businesses were forced to shut down operations to avoid spreading the disease even more. This of course had no small impact on the global and Pakistanis economy. Due to the pandemic, there was a country wide shutdown of factories and businesses Production had to be stopped, due to which a lot of daily wage workers were left to fend for themselves with no prospects of earning. Besides the unavailability of laborers, the Prime Minister of Pakistan issued a cease to all modes of transport, and ordered closing down the borders of a few states which left workers coming from different states out of a job and unable to earn, driving an already poverty ridden country deeper into the ground. When considering the impact of the pandemic on businesses, it’s apparent from past crises like earthquakes and droughts, small businesses are less likely to bounce back after a recession or natural disaster. They simply do not possess enough capital to support themselves during the crisis and not enough support and resources to reach the post disaster stage. Businesses are being affected during this pandemic due to the travel bans and airline suspensions and the slowly shutting down economy (Bartik et al., 2020).
While considering the effect of global pandemic on the global economy, it has been predicted that global foreign direct investments will shrink by a percentage of 5-15% (Asian Development Outlook (ADO) 2020, n.d.) These figures are alarming since the statistics show that to recover from an incident this monumental the world requires monetary support of $2.5 trillion dollars to get back on its feet. These sincerity of these figures can be linked with the current condition of Pakistan’s economy as well. With reports of Pakistan losing one third of its revenue, these figures give a remarkable portrayal of how the Pakistani economy is suffering. Exports in Pakistan have been severely affected by experiencing a drop of 50%. According to figures being presented by the World Bank, Pakistan’s GDP is expected to drop by 2.2% forcing Pakistan to go into a recession if not dealt with properly (Asian Development Outlook (ADO) 2020, n.d.). All of this is having a frightful impact on the businesses in Pakistan, especially for young entrepreneurs.
According to a survey conducted, 43% of businesses chose to let go of their employees during the pandemic while about 12% of the businesses decided that it was better to cut down on the job salary rather than letting go of their employees. A lot of companies chose to let go of their employees, in order to deal with the low influx of cash and keep the business afloat (Bank, 2020). The laying off employees was expected due to the severity of the pandemic and affected businesses globally. Due to statistics, an overwhelmingly low majority of businesses at only 17% was prepped to deal with a pandemic. It was not only employees effected by this pandemic rather businessmen took a grave hit as well. A lot of businesses were forced to close due to the lack of customers because of the pandemic. There has been some relief provided by government organizations to help businesses get back on their feet, such as the State bank of Pakistan has released a statement stating that their interest rate at 7% will remain unchanged for the next two years to help economic activities in Pakistan and stabilize the dropping GDP.
There is no better example of a how Covid-19 has affected businesses than looking at the life of a small business owner and the impact this pandemic has had on his business. While interviewing the shop owner of newly owned and opened graphic designing firm, the dire conditions this pandemic has forced businessmen into became obvious. When Mr Ali Qazi was interviewed he remarked at the remarkable pace the business had kicked off but due to the sudden onslaught of the pandemic, he was forced to close the office. After two months of the pandemic he had to let go of employees and was forced to shut down his newly opened business in less than five months of his grand opening. A similar story came into focus when interviewing a long-time food shop in Islamabad, Mr Asif Akmal had a successful biryani shop which had employed over 4 people. With the pandemic enforcing a lockdown on all businesses the food shop was unable to keep paying rent with no source of income, Mr Asif recalling this tearful story remarked that it wasn’t just his household suffering rather all four households of his employees starving due to lack of work.
Some businesses adapted to the changes, like Mr Ali Qazi and shifted their business online generating a cash flow from his work but other small businesses were not so successful. Heart wrenching stories like these have affected thousands of businesses across Pakistan.
Conclusion:
With small to medium business enterprises comprising 90% of all national enterprises in Pakistan, the effect of Covid-19 on the progression of these businesses is not a thing to be taken lightly (Shafi et al., 2020). Most businesses will experience a challenging time in 2021 while resuming the normal flow of business. Further studies do need to be conducted to study the in-depth effect of how this pandemic is affecting the national economy, but it is apparent that without help from the government, it will take a long time for the Pakistani economy to stabilize. But the Pakistani population have proven to be resilient and hardworking wiling to make ends meet even in these dark times and are up for the challenge to regain their lost profits and survive this crisis. This pandemic has affected the lives of everyone and caused major changes in the national economy. But Pakistanis have proven to be resilient and are getting back on their feet and looking for new ways to expand their businesses and recover their losses.
References:
1. Shafi, M., Liu, J., & Ren, W. (2020). Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises operating in Pakistan. Research In Globalization, 2, 100018. https://doi.org/10.1016/j.resglo.2020.100018
2. Bartik, A., Bertrand, M., Cullen, Z., Glaeser, E., Luca, M., & Stanton, C. (2020). How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey. https://doi.org/10.3386/w26989
3. Asian Development Outlook (ADO) 2020.
4. Bank, W. (2020). South Asia Economic Focus, Spring 2020. Openknowledge.worldbank.org. Retrieved 15 December 2020, from https://openknowledge.worldbank.org/handle/10986/33478.