COVID-19 forces businesses to use digital platforms

Kathmandu, Sept. 23

The COVID-19 pandemic has spurred more Nepali businesses to start using internet, social media or digital platforms to seize business opportunities in the wake of declining traditional sales.

The finding is revealed in the COVID-19 Nepal Business Pulse Survey conducted by the International Finance Corporation (IFC) and World Bank, in partnership with the government of Japan.

According to the study, carried out between May 25 and June 10, a fifth of businesses surveyed have started to use or have been using the internet, social media, specialised apps, or digital platforms for business purposes.

It also found that over half of Nepal’s micro, small and medium enterprises (MSMEs) face the risk of permanently closing their operations within a month under the current conditions of COVID-19 impacts.

Based on a sample of more than 540 representatives from MSMEs across all provinces, the survey also revealed over 80 per cent of businesses have suffered from a slump in sales and have taken measures such as granting leave without pay or reduced the hours or wages of their employees.

“These findings highlight the severe burden facing by the micro, small and medium sized businesses in Nepal due to the impacts of COVID-19,” said Rolf Behrndt, IFC South Asia Manager for Advisory Services. “We know these businesses play a vital role in Nepal’s economy but clearly with a drop-in demand and sales, employers have had to opt for a range of measures to cope with less revenue, prompting questions about their future viability.”

About 45 per cent of the firms had granted leave of absence to employees, and 27 per cent had reduced working hours. Across all sectors, sizes and locations of firms, 12 per cent of female employees have been put on reduced pay.

“The COVID-19 pandemic has dealt a major blow to Nepal’s economy, with enterprises of all sizes bearing the brunt with little to no revenue. About 83 per cent of the firms reported a decline in sales compared to the same time last year,” said Wendy Werner, IFC Country Manager for Nepal, Bangladesh and Bhutan. “Micro, small and medium sized businesses play a key role in helping Nepal’s economy grow. I believe these findings would be useful in preparing a well-informed response to help the businesses get back on their feet.”

MSMEs contribute 22 per cent to the country's Gross Domestic Product (GDP) employing about 1.75 million people. The Central Bureau of Statistics projects that the fallout from the pandemic will mean significant contractions in the expected growth rate for the sector in the fiscal year 2020 compared to years past.

Published in The Rising Nepal daily 24 September 2020.