A total of 61% Africa’s businesses were operating at 60% capacity or less in April due to coronavirus (COVID-19) shutdowns, a survey by Oxford Business Group (OBG) has revealed.
The survey by the global research and advisory company, conducted in partnership with Germany’s largest chemical producer, BASF, shows just how much the pandemic has impacted the continent’s economy. It was undertaken to indicate how countries across the region are responding to the coronavirus (COVID-19) pandemic.
The survey asked for feedback from almost 300 C-suite executives across Africa via a digital survey, entitled “Under the microscope: How are CEOs responding to the disruption of Covid-19”.
It added that 32% of businesses are functioning at 61-100% and about 7% of businesses were on total shutdown. The survey also showed that tourism and construction were particularly hard hit, with about 80% of companies in these sectors operating at 0-20% capacity.
The results show that Africa is ill-prepared to tackle large-scale pandemics such as the coronavirus following years of underinvestment in health care systems. However, about 82% of executives said they anticipated that the pandemic will lead to an increase public spending on the health sector in the longer term.
The pandemic has also brought longstanding weaknesses in value and supply chains to the fore, highlighting African countries rely on imported manufactured goods to meet domestic demand.
Although 66% of respondents said they expect the virus will help in boosting local industry and manufacturing, about 28% of executives saw that raw materials, transport and logistics as the biggest threat to industrial supply chains.
Managing Director and Country Cluster Head for North West Africa at BASF, Khaldoun Bouacida, said, “The crisis is a big changer, and with the disruptions in supply chains especially from China, many countries will opt to produce locally rather than import.”
According to the survey, the coronavirus is expected to take its toll on Africa’s agriculture sector, with a knock-on effect anticipated on food security. From those surveyed, 44% told OBG that they thought disruptions to the local agriculture industry would be very significant.
Three-quarters also said they expected food prices to increase somewhat in the coming two to three months. Concerns on both issues were most pronounced in sub-Saharan African countries.
Digitisation is seen as instrumental in moving companies forward in the aftermath of the global pandemic, with several of the region’s economies already tapping into innovative technologies. Almost half of respondents told OBG that their firm was currently investing significantly in innovative tech solutions to facilitate their operations.
According to Bouacida, however, Africa is already a pioneer in the digital field.
“This trend is not new to Africa. Previously, though, authorities were at times reluctant to implement such tools, but this crisis now offers African youth and start-ups the opportunity to show that it works,” he said, adding, “I see this as an opening to implement more technological solutions and digital tools moving forward.”
Various companies in Egypt, Ghana, Kenya, Algeria, Morocco and Tunisia, participated in the African COVID-19 CEO Survey.
