By Shelly-Ann Mohammed
One chilly morning during the winter of 2008, I recall sitting on a train bound for DC from Manhattan. At the time, I worked for a law firm headquartered in New York that employed over 600 lawyers across the globe. I was living through the uncertainty of the times. Though I was deeply concerned, I could not have imagined the crisis that would follow. I glanced across the aisle to see a woman holding her head in her hands crying. She was telling the nearby passengers that she had just been laid off. In another row, a man was telling other nearby passengers that he did not know how to tell his wife he was just laid off and did not know how he would take care of their family. In the winter of 2008-2009 over 750,000 job losses were recorded every month in the USA, 8.7 million over the course of the recession. My own law firm would dissolve later that month and give their 600 lawyers, including me, one (1) month notice without pay to find another job.
While it is too early to predict with any confidence the economic downturn that may be facing us due to coronavirus, a global recession seems inevitable. Early indicators suggest the US could face job losses of over 1 million a month between now and June. Some sectors like hospitality and airline could be far worse. The Caribbean is facing not only the impact of COVID-19 on tourism and the wider economies but also the impact of falling oil prices.
Small, medium and large businesses in the Caribbean are typically highly leveraged. Many companies have cash liquidity of only 1-2 months. Companies that have taken on too much debt and have weak business models will become distressed due to the crisis and this will ultimately lead to some closures, job losses and fire sales of assets. Traditionally the Caribbean has been challenged to work together but given this global health emergency and our common interest in maintaining economic stability, my hope is that CARICOM leaders will rise to this challenge and work together to stabilise the region.
This is an unprecedented time in our history. Public and private sector partnerships will be more important than ever. Collaboration and innovation will be key to our success. Our future was likely to be shaped by digital transformation, but few Caribbean companies were ready for this. COVID-19 is testing our systems and simultaneously building our resolve and operational resiliency in order to survive.
It has accelerated our need for digital transformation and some companies are already rising to the challenge. Groceries, pharmacies, small food vendors, restaurants are developing online options and schools and teachers have launched online classes and quizzes. Manufacturers are trying to move to direct to consumer models. Companies that host conferences or seminars are moving to online models.
Major impact to businesses due to COVID-19 include:
- an inability to visit customers
- decline in sales performance and
- an inability to resume production.
However, on the flipside businesses have:
- improved the ability to work remotely
- there has been wide recognition of digital transformation and
- continued business development/sales online.
Not only will businesses need to continue to develop digital capabilities post crisis, it is crucial that we ensure the right training and education in technology will be available to future generations. While some jobs may no longer exist, others will be created. Some businesses will be able to shift technology capacity and investments to digital platforms and mitigate their risk but others will need the help of entrepreneurs to create new systems to support them.
For example, launching an online digital payment platform that artists can use or a delivery system to support smaller fruit and vegetable vendors. Banks and other financial institutions must accelerate digital payment options. Caribbean digital payment options similar to Apple Pay, Google Pay, Samsung Pay, Venmo, Square Cash and Zelle need to be developed to support digital transformation. We need to be able to transact all business from a smartphone, computer 24×7 without having to set foot physically within a branch office. This black swan event is an opportunity for entrepreneurs to disrupt the way we have done business with permanent positive effect.
Arundhati Roy said it best, in his recent article for the Financial Times, “And in the midst of this terrible despair, it offers us a chance to rethink the doomsday machine we have built for ourselves. Nothing could be worse than a return to normality. Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” (Financial Times April 3, 2020 (FT Online))
Please continue to exercise personal responsibility and be safe above all else.
Shelly-Ann Mohammed is the head of ACCA Caribbean. She is a lawyer with over 10 years of global experience and holds an MBA and Masters in Global Business from Oxford University.
