Business down by 74 pc, 61% industries closed

 Impact of COVID-19 on national economy

Kathmandu, Aug 5

The coronavirus pandemic and subsequent lockdown had caused a complete closure of about  61 per cent enterprises, leading to 73.8 per cent drop in the production and trade of goods and services in the country.

Only 4 per cent enterprises ran in full operation and 35 per cent operated partially, concluded a recent nationwide survey on the ‘Impact of COVID-19 on the economy’ conducted by the Nepal Rastra Bank (NRB).

The central bank published the results on Wednesday. The results are almost identical to the earlier estimates that about two-thirds of the businesses in the country were badly affected by the pandemic.

The pandemic, and the lockdown, announced on March 24 and lifted on July 21, hit hard the businesses in education, hotel and restaurant, transportation and real estate sectors. Only 4 per cent enterprises in education sectors were in operation while 96 per cent were completely closed and many of them are not opened yet.

Likewise, 91 per cent hotels and restaurants, 89 per cent real estate business, and 76.5 per cent transportation enterprises were shut due to the pandemic. Only 1.8 per cent hotels and restaurants ran in full capacity with health safety measures in place.

According to the study, cottage enterprise, micro enterprises and small retail traders and small enterprises were highly affected. The number of such businesses that remained closed during the period was higher than the national average.

The businesses that run in full operation were from agriculture, communication and health sectors. About one-third agriculture-related businesses ran in full operation during the lockdown followed by 27 per cent in communication and 23 per cent in health sectors.

However, higher number of enterprises in agriculture, mines and excavation, health and social, manufacturing, and electricity, gas and water sectors ran in partial capacity – from 53 to 69 per cent.

During the lockdown, 97 per cent enterprises of various scale reported the loss of about 74 per cent business. Likewise, 0.88 per cent reported that their business was shrunk by 15.5 per cent while 2.5 per cent said their business remained as it was.

However, the small enterprises witnessed the largest loss of business during the period with the reduction of business by 76.6 per cent followed by micro enterprise/trade and cottage industries.

Job loss

The businesses and industries lay off 22.5 per cent workers and staff during the lockdown. Most of the workers and staff hired on contract-basis were the first to lose the job. In terms of the sector, hotel and restaurant sector curtailed the highest number of employees while in terms of size, the micro, cottage and small enterprises/traders curtailed largest number of jobs.

Cottage enterprises lay off 30.5 per cent workers while the large scale industries curtailed only 14 per cent workers. However, the large industries lay off the permanently hired workers in a large numbers.

The survey found that that the businesses participated in the survey cut about 18.2 per cent salary of their staff and workers with hotel and restaurant, transportation and education topping the list.

It is reported that it would take about nine months on average for the enterprise to get back to the normal position. However, hotel and restaurant sector need 13 months.

The central bank had conducted the online survey from June8 – 24.  Altogether 674 enterprises participated in the survey. About 42.7 per cent participants were from micro enterprise/trading, 23.3 per cent small enterprises, 21.7 per cent cottage enterprises, 8 per cent medium-scale enterprises and 4.3 per cent large industries.

Published in The Rising Nepal daily on 6 August 2020.