Govt-arranged moratoriums with commercial banks helped businesses – PSC
Business and COVID-19
…says businesses’ fixed costs were piling up
The novel coronavirus 2019 (COVID-19) pandemic has not only devastated people’s lives, but also the global economy. In Guyana, the situation is no different.
The country recorded its first COVID-19 case on March 11, 2020 and by the following week, authorities announced a shutdown of all ports of entry along with a 6pm to 6am curfew. The outbreak of the virus in Guyana was coupled with the March 2020 elections in Guyana, which had already caused uncertainty in the business sector.
The electoral process would eventually run on for five months before a government was finally sworn in, but COVID-19 continues to rattle the country.
Not only have more than 6000 citizens contracted the virus, with over 160 dying, but many businesses have been severely affected by the pandemic, and this impact has naturally trickled down to the employees. Scores of persons were placed on the breadline as businesses were forced to shut down, while others, such as frontline and essential workers, had to make sacrifices and risked their lives to continue to work in unprecedented conditions.
At the beginning of 2020, Guyana had an unprecedented growth trajectory stemming from the oil and gas activities offshore. However, this quickly changed with the COVID-19 outbreak here.
Several sectors took a bigger hit than others during this time. The entertainment, tourism, and hospitality industries were the most affected, with businesses suffering as much as 80 per cent losses. The retail sector saw a significant dip in performance as well, recording between some 20 to 50 per cent losses.
Private Sector Commission (PSC) Chairman Nicholas Boyer explained that even the essential businesses, which remained resilient throughout the pandemic, in some instances have still experienced a slowdown.
“For instance, businesses in the grocery sector have noticed that some of the luxury items they sell have not moved as fast as they would before. But the basic necessities are moving as they were, if not better. So, that’s what the pandemic has done to the country. It has caused an overall impact across all the sectors.”
Boyer is sitting on the Commission as President of the Georgetown Chamber of Commerce and Industry (GCCI) – a position he still holds. He joined the GCCI membership in the capacity of Director of National Hardware Ltd – one of the country’s major retailers that were also affected by the fallout of COVID-19.
“At National Hardware, we had noticed that it was a bit challenging. Imports were a bit lower than last year; sales were also commensurately lower. We obviously had to do a little discounting and promotions. So that means selling at lower prices to even move a decent volume of goods because we have a certain amount of overheads and expenses that are incurred no matter, whether we open our doors or not. So, for us, we need a certain amount of sales. Even if we shut our doors, we would still need to transact a certain amount of business to be able to pay those overheads. It has been a very tough year, and I don’t think we’re very unlike many other businesses. All businesses faced the same challenges, where their fixed costs were piling up.”
However, the PSC Chairman said that one of the things that helped businesses was the commercial banks providing moratoriums.
“If we can get that sort of relief where those monthly finance payments we have to make to the banks whether they are vehicle loans, equipment loans, or mortgage loans of buildings – if we don’t have to put cash flow towards that, it is cash flow that we can use to pay employment costs and other costs. So that has been helpful.”
Only last week, the People’s Progressive Party/Civic (PPP/C) Government announced the extension of several banking measures to relieve the burden of citizens during the pandemic until June 2021. These measures, which were put in place back in August by President Dr Irfaan Ali shortly after assuming office, include lowered interest rates and an extension of the moratorium on loan payments.
This was just one of the initiatives implemented by the new PPP/C Administration to restore the country’s economy.
In fact, the Ali-led Government took several decisions to ensure that Guyana did not go into an economic recession, including some measures that brought relief to the Private Sector.
But the new regime came under heavy criticism for being “too business-friendly”.
Responding to the criticism, President Ali said at the launch of the Canada-Guyana Chamber of Commerce (CGCC) on December 4, 2020 that his Government wanted to make Guyana more business-friendly.
“We’re not taking back the relationship. Businesses help to create wealth, help to generate jobs and it is the role of Government to facilitate the growth and development of businesses. At the same time, we facilitate the development of our human resources. We ensure that we collect enough revenue so that all of our population can have the best possible [welfare].”
Meanwhile, the Private Sector has welcomed the reopening of the economy.
Boyer said that the resolution of the electoral deadlock has restored investors’ confidence in the economy.
“To be fair, I have to say from August to now, our economy has actually been fairly resilient given the COVID-19 crisis… Definitely, we’re doing lower than our total sales last year, but overall compared to the Region – looking at what’s going on in other countries in the Caribbean as well as in Latin American – I don’t see the same sort of slowdown here as I see in those countries. That’s what gives me confidence and the fact that we have clarity and certainty about what Government plans are…. So, for businesses like myself, what we’re doing is still investing in Guyana, because we know once that pandemic comes to an end, our country is really going to take off. So, that has somewhat mitigated the really hard effects of the pandemic on businesses.”
In fact, the GCCI President disclosed that the Chamber’s membership has expressed confidence in the economy, because they know the potential there is for growth, despite the pandemic and its impact.
“Everybody wants to be a part of that growth story, so everybody is investing now, because a lot of what we’re talking about in the membership is new facilities, additional product lines, and those are things that take months, if not years to bring into effect. That’s what we’re noticing people are doing. They’re putting in the investments for those long-term facilities or long-term additions to their businesses so that they can be a part of the growth that is coming.”
Going into 2021, the PSC Chairman related that they expect a boom in a number of the sectors especially those that were thriving prior to the pandemic. These include the construction sector, which he noted, is going to bloom with the hype about new projects and new investments.
Boyer posited that this meant new housing would be needed, as well as new warehousing, new manufacturing facilities – all of which require construction.
He also lauded the efforts of the various ministries, particularly the Agriculture Ministry that is pushing activities throughout the country, thus, a boom in the rural economies is expected.
“Those rural economies had stagnated over the past couple of years. So, with agriculture bringing some revitalisation in those rural economies to the east and west of the country, it really gives us confidence… Because since the closure of the sugar estates, at National Hardware for instance, the smaller hardware stores that we supply goods to and contractors in those regions, they were very pessimistic about the outlook with the closure of sugar estates and an uncertainty of what would happen to the rural economies in those places. But now, they have a certainty that those economies are going to grow and they see projects being developed for those economies and therefore, people are willing to invest and willing to, in my case, take products again after reducing the amounts they were taking.”
According to the PSC Chairman, the only speed limit for the country doing business as usual now is the COVID-19 pandemic.
Notwithstanding, Boyer said the Private Sector was looking forward to a very robust infrastructure plan from the Government this year.
Some of these major projects that are on stream to kick off this year are the new Demerara Harbour Bridge, the bridge to Suriname, the road to Parika from West Bank Demerara and the expansion of the highway to Berbice.
“When you kick the country into a construction phase like this, it is a form of stimulus that helps us through this coronavirus pandemic, because infrastructure creates construction jobs and those jobs get monies into certain sections of the populations and they, in turn, spend it in the communities where these construction partnerships are from. For us, we are looking forward to that sort of stimulus moving forward and allow this country to sort of ride through this coronavirus pandemic.”