Mozambique: Pandemic Leads to Collapse in Turnover in Business

Maputo — Business turnover in most Mozambican enterprises collapsed by 50 per cent or more during the state of emergency decreed by the government to restrict the spread of the Covid-19 respiratory disease, according to a survey of the impact of Covid-19 on business carried out by the National Statistics Institute (INE).

The fall in turnover began even before the Covid-19 pandemic struck Mozambique. Thus, turnover fell from 2.28 billion meticais (32.1 million US dollars) in January 2019 to 1.74 billion in January 2020, a decline of 23.9 per cent. The fall in turnover in February was 26.8 per cent, and in March, the month when Mozambique recorded its first covid-19 case, it was 26.5 per cent.

The state of emergency took effect as from 1 April. That month, turnover slumped by 60.7 per cent, compared with April 2019. In May, the decline was 47.5 per cent and in June it was 51.9 per cent. The INE survey did not consider the subsequent months.

To construct its sample for the survey, the INE covered all large enterprises, and a representative sample of medium and small enterprises. There is a sampling error of five per cent.

Almost all companies surveyed by the INE said they had been affected by the pandemic. This reached 100 per cent in sectors which the government ordered to close down, such as education, sports and recreational activities.

Only 2.9 per cent of the companies surveyed closed down. 3.9 per cent suspended their activities and 7.6 per cent suspended their workers' contracts. 4.5 per cent rescinded work contracts, and 2.6 per cent sent their workers on collective holidays.

The most common response to the crisis was to adopt rotating work patterns in new shift systems. This was the solution chosen by 56 per cent of the companies, covering 38.5 per cent of the total number of workers.

20.7 per cent reduced the number of hours worked by their employees, and 14.3 per cent told their staff to work from home ("teleworking").

Over 80 per cent of the enterprises were able to pay their workers' wages in full (87.3 per cent in April, 80.9 per cent in May and 80.2 per cent in May). Four to five per cent paid 75 per cent of the wage bill, between three and six per cent paid 50 per cent, and between one and four per cent paid only 25 per cent.

As for payment of taxes, in April 84 per cent of the enterprises paid all their taxes, but in June this figure fell to 79.4 per cent. 11.4 per cent paid no taxes at all in April, 12.2 per cent in May and 14.7 per cent in June.

47.5 per cent of the enterprises reported cash flow problems during the state of emergency, 43.7 per cent faced difficulties in exporting or importing, and 17.5 per cent complained about access to bank credit. But by far the most widespread constraint was lack of demand for their goods or services, affecting 75 per cent of the enterprises.

Asked about their expectations for the next three months (July to September), the managers of 41.3 per cent of the enterprises expected turnover to decline. 30.3 per cent believed it would remain steady, and only 28.4 per cent expected it to increase.

70.4 per cent of the managers said they would not lay off any workers, but 23 per cent said they would reduce the work force, and only 6.6 per cent intended to employ more staff.

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