Economists and experts around the world are unanimous: the unprecedented coronavirus pandemic will have significant economic impacts. Forecasts predict it will negatively affect several aspects of economic life, sparking fears of an economic crisis that could prove difficult to combat in the months to come.
A survey conducted by the Chamber of Commerce and Industry of Benin reveals substantial effects on the economy. Nearly nine out of every ten enterprises interviewed in the country are affected, though some are more impacted than others are.
The nature of the consequences suggests that many enterprises are facing a delicate financial situation. Several of them have already registered a drop of more than 60% in their turnover.
Whether it is the cancellation of reserved stalls for fairs and exhibitions, deserted tourist sites, cancelled airline tickets or called off public events, businesses face an inability to bring in revenues or funds they had already invested. As a result, they are unable to pay their employees or rent for their work premises as well as honour their obligations to banks and tax authorities. In addition, supply disruptions are leading to delivery delays, particularly for government orders.
The survey highlights the shock companies involved in international trade are facing and the disruption they experience in supply chains:
- None of the surveyed exporting firms was spared, even though impacts range from weak to strong.
- Conversely, 11% of importing firms and one in five non-trading firms indicated that they did not feel any impact at all.
- Nearly double the percentage of exporting and importing enterprises said they are strongly affected: 69% and 61% respectively said COVID-19 had a strong impact on them, compared to the 37% of enterprises not participating in international trade that said the same.
Exporting companies are caught between the hammer and the anvil, pressed on every side. Border closures in most countries have led to shortages of imported products, forcing some local enterprises to turn to the domestic market to find their inputs. High domestic prices for inputs, however, made it difficult for many local firms to access these, thus firms hesitated to place orders. This has induced a drop in the price of domestic inputs that has made locally sourced materials affordable. This was the case for the surveyed companies in Benin exporting tropical products: although they had originally hesitated to source their materials locally, prices for their inputs have dropped by more than 29% since the crisis began.
In addition, exporting companies unable to sell their products have found themselves with an overstock of excess inventory.
As for importing companies, they are facing unprecedented customer behaviour in addition to their import difficulties. Driven by the fear of contamination, consumers mistrust products (especially frozen products) imported from countries affected by COVID-19, particularly China, France, Italy, Belgium and Asian countries.
Firms have adopted various strategies to cope, including putting some or all of their employees into temporary unemployment programmes. Several measures have also been put into place to help them, such as postponed fiscal or banking deadlines. The government of Benin and its partners have made available 100 million CFA francs (around $165,500) for rent subsidies to enterprises in the tourism sector. In addition, 200 million CFA francs (around $331,100) in employment aid have been allocated to 50% of the workers in affected enterprises. Companies in Benin continue to have access to expert advice year-round, provided by the Benin Chamber of Commerce and Industry, and especially during this period of crisis.
Conclusion
The whole world has been facing the COVID-19 pandemic since December 2019. It has affected most countries through massive consequences on social life and business development. In Benin, the pandemic has led to an unprecedented economic slowdown, with a greater impact felt by companies involved in international trade, which has been very strongly affected by the shock.
To enable Beninese companies to cope with the adverse effects of the COVID-19 crisis, the Chamber of Commerce and Industry of Benin calls on all stakeholders to take thoughtful and concerted measures to boost business activities.
