The disappearance of customers’ cash flows has made it imperative for all businesses, large and small, to seek alternative sources of cash. As inflows dry up and bills flood in, the time has come to seek new directions to business continuity. Cash has never been a greater king than it is today. The Central Bank knows this, hence the many attempts to bring back hope for small businesses through soft loans and grants.
However, not many MSMEs know where and how to find the Central Bank money? This is partly because some are yet to understand the character of the economic consequences of the pandemic. It is important for every business to maintain its vision and stay in shape even as things bite harder. Finance, which has become, an even more critical resource, will gravitate to those who are attractive to it. Those who talk to God must first get into the attitude of prayer. They don’t talk to God dancing around.
The rate at which people die from COVID 19 is nothing compared to the rate at which it devastates an economy. The number of reported deaths, divided by the reported cases – what people in the medical and demography professions call the crude mortality ratio of a disease, is very important in giving hope to those infected.
Looking at this ratio for the Coronavirus infection, which hovers around three to four percent, it would appear that the raging fear of the pandemic is exaggerated or even misplaced.
Quote: Recovery will require a lot of financial and managerial engineering, SMEs must therefore follow any trails that lead to the cash
The low mortality ratio seems to have provided a reason to assuage the fears of victims and even those not yet infected. Quite seriously, there is nothing that should scare anyone with a sickness that parades such low capacity to kill, baring of course, other underlying factors like old age and pre-existing chronic diseases – what they call co-morbidity.
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There is however, economic morbidity – death by economic causes. Avoiding this death is as important as avoiding infection of the virus, and every economic agent must guard against it.
Even with the reported low mortality rate of the virus, there are some other facts about it that are not so comforting, which add to the fear of economic death. For one, there is, as yet, no known cure for COCID 19. While a number of therapeutics are undergoing clinical trials in several countries, including China, and more than 20 vaccines are in the process of development, there are currently no vaccines that have been licensed, or therapeutics publicly available.
Besides, the fact that some carriers may be asymptomatic and infect unsuspecting victims, amplifies the fear of the disease. The greater fear is actually on the economic front. That is probably why many countries are rushing to unlock their systems only to relock them, the fear of the economic consequences of prolonged lockdown are as grave as the fear of death, and this should propel our innovative spirit.
In its report on the impact of COVID 19 on the tourism industry, the United Nations World Tourism Organization [UNWTO] gave a first assessment highlighting a massive shrinkage in international arrivals and receipts in 2020. In fact, the UNWTO has revised its 2020 prospects for international tourist arrivals to a negative growth of one percent to three percent.
This development implies an estimated loss of US$30 to $50 billion in international tourism income. This impact cuts across several regions, including Asia and the Pacific, which is predicted to be the worst-hit region, with an anticipated fall in arrivals of 9 percent to 12 percent. Pandemics, including Coronavirus, are not new to the world. The world has seen several of such disasters in history and can easily chart a cause of recovery for itself. Those who prioritize their action properly may turn the corner faster than others.
The economic and health consequences of a pandemic are most seriously felt by the most vulnerable and the poorest members of society. This was what happened during the Global Financial Crisis and the Ebola Crisis. The three most serious epidemics in history – the Bubonic Plague, also called Black Death, which killed about 60 million people, from 1348-1351, had the same effect. It was so bad, that in many areas between 25-40 percent of the population died.
In a particular extreme case, about 80 percent of the population of a place was wiped out. Like COVID 19, the plague did not kill indiscriminately. Most of its victims had underlying conditions, like those of the majority of COVID 19 victims, which amplified their chances of infection and death. The other very catastrophic epidemic was the deaths of Native Americans, following the interaction of the Old and New Worlds, and the 1918 Influenza Pandemic. They all had serious economic, human and material consequences, often ending in a recession.
Recovery requires the injection of fresh capital at all levels of business. That is why governments around the world are rallying round their financial systems to shore up support to the real sector. Undoubtedly, the economic engine of the world has been turned to “slow”. This is normal with pandemics, and comes with a chain of reactions that usually take a while to fully unfold.
The business community has been hit so hard that it will take some time to recover. In the United States alone, over 40 million people have lost their jobs and more are going to do so. Recovery will require a lot of financial and managerial engineering. SMEs must therefore follow any trails that lead to the cash or find somebody who knows somebody who can lead them to the cash. They must also look out for innovative ideas. The disappearance of internal cash flows makes it mandatory for them to seek external financial sources. By now every MSME should have heard of the facilities offered by CBN, and be on their trail.
While finding the cash is one of the matters that should preoccupy any business leader today, he should also try understanding requirements for accessing them. Every SME operator should seek help where necessary to know what is available out there. The many financial packages of the CBN have prescribed modalities for getting them.
Get all the help you need. Operators may build into their costs, the consultancy or finders’ fees necessary to obtain these relatively cheaper funds. This is not exactly the right time to live in your own world. Work with your trade group or association, to get information, not only on available facilities but also on the possibility of Pivoting. Pivoting involves creating useful add-ons to your business and attractions that not only sustain existing customers but also attract new ones. This is more particularly important for businesses already selling online services.
