Nearly 5 % of businesses reported to have permanently closed in Zambia since the onset of the COVID-19 pandemic in early 2020, a new World Bank survey has revealed.
According to The World Bank report, Monitoring the impact of COVID-19 on firms in Zambia , Small (5 to 20 employees) and medium (21 to 99 employees) sized businesses were far more likely to have closed than large companies .
The surveys in Zambia were follow-ons from the baseline Enterprise Survey that was conducted in Zambia immediately prior to the pandemic.
The phone surveys were done to allow a better understanding of the effects of and responses to the COVID-19 pandemic on firm operations, hiring and firing, and expectations of future operations and labour demand in order to implement interventions and policy responses.
The information presented was based on the sample of 570 firms that responded to both round 1 (R1) and round 2 (R2) surveys. Round 2 (R2) of the survey was conducted between December 19, 2020 and February 18, 2021. The report did not clearly indicate what period the first round survey was conducted.
“Nearly 5 percent of the businesses reported to have permanently closed in Zambia since the onset of the pandemic. Small and medium-sized firms are the most likely to have ceased operations entirely, while medium-sized firms are most likely to have suspended operations temporarily,” the World Bank said.
“The first round of the Zambia Enterprise Surveys (ES) follow-up survey on COVID-19 showed that enterprises in the country experienced rapid and deep declines in performance. Results from the second round, conducted in late 2020 and early 2021 show some signs that the overall environment is improving, although significant challenges remain.”
In addition, there have been disruptions on both the supply and demand sides over the last year in Zambia such that In Round 1, more than eight in ten firms reported experiencing a decrease in demand for their product or service compared to before the pandemic.
About 70% of firms in Zambia experienced disruptions to their supply of raw material and inputs during the Round 1. This is a slight improvement over June/July where about 80% faced this disruption.
The World Bank noted that the average duration of temporary closures doubled between Round 1 and Round 2 from 7.3 weeks to 14.6 weeks was higher than the average duration reported in the rest of sub-Saharan Africa (8.2 weeks).
Three fourths of the firms experienced decline in sales in December/January compared to the same month in the previous year.
For the average Zambian firm, sales in the last months of 2020 were about a third lower than their levels in the same months in 2019.
The share of firms exporting, and the share of exports in total sales declined in November/December with just about 6% of Zambian firms report exporting at least 1% of their sales, down from about 10% of firms in May/June 2020.
“While this could partly reflect seasonality of exports, the figure for November/December is below the value based on annual sales as captured by the pre COVID Enterprise Survey. Larger firms saw a significant decline in share of firms exporting (at least 1% of their sales) from about 22% in May/June 2020 to just 8% in November/December. Similarly, share of export in total sales has declined (to 1.6%) compared to 2.6% in May/June, with the decline particularly significant for larger firms,” The World Bank said.