Covid negatively affects businesses
During the first half of 2020, about 273 712 Malawians became jobless due to the impact of the coronavirus pandemic and Employers Consultative Association of Malawi (Ecam) projects 680 496 jobs could be lost by December.
The trend will likely raise unemployment levels and create an economic catastrophe at a time the World Bank has projected that the local economy could slip into recession and contract by about 3.5 percent by December this year.
Based on the Ecam study, the country has—on average—been losing about 1 500 jobs daily, translating to 45 000 job losses monthly.
The Ecam study shows that theaccommodation and food sector are the worst hit, accounting for 14 percent of the job losses.
In contrast, though, Ministry of Labour figures paints a different picture, indicating that during the same period, 2 712 people lost their jobs. The ministry’s records represent just about 10 percent of the Ecam figure.
Despite this, the ministry’s figures are way higher compared to the same period last year when 471 employees were retrenched.
This means that job losses based on the ministry’s figures climbed by 476 percent within six months, meaning that the country lost an average of 452 jobs per month compared to an average of 79 jobs per month lost during the same period in 2019.
In a written response this week, Ministry of Labour public relations officer Christina Mkutumula attributed the rise in job losses to the global pandemic.
She said: “The ministry has already developed a Covid-19 workplace strategy to help employers to cope with the situation.”
But Mkutumula could not explain why there was a wide disparity between the ministry’s figures and what Ecam, which represents employers, had captured.
In a separate interview, Ecam executive director George Khaki said they stand by their figures, adding that the Ministry of Labour was not painting a true picture on the ground. He said the ministry focused more on those that file notices for retrenchment.
He said: “It is important to have a comprehensive approach of capturing data that will help in decision-making.”
Khaki said the Ecam study, which started immediately after the country registered the first cases of Covid-19 on April 2 and finalised last month, focused on all sectors of the labour market to appreciate the wider impact of Covid-19.
He said based on the study, the global pandemic will cost Malawi about K124 billion ($164.71 million) in real output.
“The virus will also likely have a profound effect on labour income with an estimated loss of K84.6 billion in monthly earnings of labourers,” he said.
Malawi Congress of Trade Union (MCTU) also found the government figures unrealistic, with secretary general Dennis Kalekeni indicating that four unions out of its 24 affiliates had reported 671 job losses. He said the hospitality and education sectors were among the most affected.
He said MCTU is currently seeking support from partners to undertake a comprehensive assessment of job losses.
Kalekeni blamed government for failure to utilise the tripartite labour council, which brings on the table government, MCTU and Ecam to appreciate the reality on the labour market.
Commenting on the matter, economist Betchani Tchereni agreed that the Ecam figures were closer to reality than those from the Ministry of Labour.
“The 2 700 is probably from those enlightened; those that would care to report to the ministry and this does not paint a correct picture,” he said.
Businesses scale down operations
Businesses we spoke to said they scaled down their operations while others were operating below their full capacity.
While the businesses were cutting back on investments, there was also reduced demand for goods and services due to disruption in the supply chain, which has slowed down imports of raw materials.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) figures show that prior to the pandemic in March, capacity utilisation for 52 percent of firms in the manufacturing sector was between 50 percent and 75 percent.
But the chamber said at the end of June, the utilisation capacity dropped to below 50 percent because firms were unable to import raw materials due to global travel restrictions instituted in the wake of Covid-19.
In an interview, MCCCI director of business environment and policy advocacy Madalitso Kazembe said with many firms relying on imported raw materials for production, restrictions in other countries have impacted them.
Small and medium enterprises (SMEs) have not been spared the impact of Covid-19 either.
In the densely populated Area 25 in Lilongwe, there used to be a buoyant hair-dressing salon called Kgomotso Beauty House.
But in an interview last week, owner of the salon, Kgomotso Boyce, said revenue had shrunk and that she no longer found her business venture sustainable.
She said prior to Covid-19, she could make between K100 000 and K150 000 a day, but now with the pandemic taking its toll, revenue has dropped to about K20 000 per day or even less.
Said Boyce: “Most people have literally stopped coming to dress their hair for fear of contracting the virus.
“In addition, we see people who earlier booked us cancelling their weddings and this also means a huge loss of business.”
It was a similar tale in Mzuzu where Catherine Nyirenda, who operates a salon at Taifa Market in the city, said she was forced to close shop due to lack of business.
She said her revenue dropped by almost 83 percent; hence, could not sustain her business further.
Said Nyirenda: “Before Covid-19, I was making K300 000 a month, but now I only make K50 000 from which I am expected to cover all overhead costs, including sourcing materials.
“People have stopped coming to the salon because by the nature of our work, we cannot observe social distance, we work at close range with our clients.”
Bars and night clubs have also not been spared from the impact of the pandemic.
Emmanuel Thembachako, general manager of Centre Point—one of the popular drinking joints in Lilongwe—recounted that before Covid-19, they would make up to K20 million monthly from sales, but revenue has dropped to about K5 million per month.
In Blantyre, Mirriam Khuoge’s baking business has also taken a knock after prospective clients started cancelling their orders as they have postponed their weddings and parties in view of government’s restrictions on social distancing and the number of people allowed to attend an event.
The owner of M’s Cakery in CI, Blantyre, said: “The day government announced that schools should be closed, I lost four birthday cake orders. Then I also had wedding cake orders and in that case I had to refund the money.”
Thoko Temani, who until March this year was supplying her agricultural produce to three hotels in Blantyre, says she has suffered the toughest five months in her business.
She said: “I was told to immediately stop supplying my produce at the hotels and I had no questions about it as I could see with my eyes the situation was bad.”.
Temani says the pandemic does not only continue to reduce her revenue but that of her contract farmers as well.
Lewis Juwawo, another Blantyre-based small-scale businessperson who owns a restaurant and plies his trade along Sanjika Road, admitted that the pandemic has created a tough business environment for him.
He said: “I rely on school children from Namiwawa Primary School and companies around, but with schools closed and most
employees working from home, I have no one to buy my food.”
Large-scale business bearing the brunt
Raiply Malawi Limited is one of the firms which have been heavily affected by the pandemic.
In an interview this week, the company’s spokesperson Dalitso Chimwala said they have scaled down their operations by half.
“Although we have scaled down operations, we are still maintaining our workforce so far,” he said.
Lilongwe-based Zamm Investments, a manufacturing firm, is also on its knees. The company manufactures Cooldrop bottled water, varied brands of Coolfizz carbonated drinks and Cooltouch toilet papers, among others.
The firm’s operations director Mohammed Tutla said about 25 percent of its business was lost due to Covid-19 as demand for its products has plunged.
He said: “It’s a domino effect as all industries complement one another in their respective businesses.”
Lilongwe Dairy is equally affected with the enforcement of restrictions and partial closure of the tourism industry, schools, restaurants and prohibition of public gatherings such as weddings and social events, which have resulted in a drop in demand for food and beverages by 29 percent in April, May and June.
Social cash transfer yet to roll out
Meanwhile, government is yet to roll out the K38.9 billion six-month social cash transfer programme, which was set to relieve vulnerable people in urban areas from effects of Covid-19.
In a written response last week, Ministry of Economic Planning and Development director of poverty reduction and social protection Patricia Zimpita said what remained of the programme—which was scheduled to roll-out in June—was approval of the targeting criteria.
She said: “We had to finalise some preparatory activities, especially targeting of beneficiaries as well integrating Covid-19 prevention measures during implementation.”
In April, former president Peter Mutharika announced that the programme will target 172 000 households in urban areas with 80 178 in Lilongwe, 66 744 in Blantyre, 17 258 in Mzuzu and 8 703 in Zomba with K35 000 monthly stipends.
The programme is envisaged to target 35 percent of the urban population and its direct beneficiaries include vendors, minibus touts, kabaza operators, street children and beggars, petty traders and casual labourers living in densely-populated peri-urban hotspot areas.
According to the 2020 Malawi Government Annual Economic Report, the economy is projected to lose about K56 billion in real GDP, using 2010 constant prices, which translate to about K244 billion in nominal GDP or 3.5 percent loss in nominal GDP if the pandemic is contained by the second quarter of the 2020/2021 financial year.
A rapid cost benefit analysis on the impact of Covid-19 done by the National Planning Commission (NPC) showed that moderate movement and livelihood restrictions could generate $6.7 billion (about K4.9 trillion) in gross domestic product loss over the next 30 years.
By Tuesday this week, total coronavirus cases in the country stood at 5 193 with 2 314 active cases and 163 deaths. n
ADDITIONAL REPORTING: MARTHA CHIRAMBO, STEVE CHILUNDU, ORAMA CHIMPHWANYA and DUMBANI MZALE,
