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Hind Al Soulia - Riyadh - KUWAIT CITY — Since Kuwait instituted lockdowns to reduce the spread of the COVID-19 virus last March, 45% of Kuwaiti business owners said they have suspended or shutdown their businesses.
Another 26% are on the verge of collapse after seeing their revenue drop by more than 80%, revealed a Business Impact Survey published by Bensirri PR (BPR), an independent corporate, financial and political communications firm based in Kuwait. The report is the only COVID-19 related Business Impact Survey conducted in Kuwait.
Key survey findings:
• Business closure rates are high, more closures expected
To date, 45% of respondents have suspended or shutdown their businesses. Another 26% on the verge of collapse after seeing their revenue drop by more than 80%. With full curfew enacted in Kuwait on May 11th, more closures are expected.
• Delay in legislation led to acts of survival in violation of existing laws
In a desperate act of survival, 32% of respondents have adjusted employee hours or salaries in clear violation of Kuwait's labor law. 15% have already started laying off staff instead of waiting for legislation to pass as Kuwait enters its third month of the crisis.
• Shops closed, expenses remain, and government support absent
Now in their third month of working capital pressure, 56% of business owners / CEOs say they cannot afford to cover their fixed costs for another two months under the new status quo.
• Most impacted sectors to date are retail, contracting, and professional services (measured by revenue drop and status of operation)
The Kuwait Business Impact Survey (KBIS) gathered key insights from 498 Kuwaiti businesses that were profitable in 2019 across 13 different sectors, and provides decision-makers with a direction to better understand policy decisions surrounding the future and sustainability of the Kuwaiti economy in a post-COVID-19 environment.
The survey was distributed between April 24 and April 28, 2020, during the partial curfew period and prior to the full lockdown announced that went into effect on May 11, 2020. The respondents were asked about the change in operations under COVID-19, their predictions on business outlooks, and their assessment of the Kuwaiti government's response and responsibility during the outbreak.
"This is a difficult period for the private sector in Kuwait, as they have taken many painful steps to weather the short-term economic impact," said BPR Communication Manager and the lead on the report Mohammed Almutawa.
"The survey's objective is to ground the conversation about the impact of COVID-19 on local businesses with facts and numbers to help business owners and policymakers stay informed and navigate the current and future economic landscape."
When asked about their outlook on market recovery, 45% of Kuwaiti business owners expect slower economic activity to extend into 2021. While 52% said it will take up to two full years for revenue to return to 2019 levels.
The survey also found that only 15% of business owners are fully aware of the economic stimulus package announced by the Kuwaiti government, and 81% of respondents said that current government policies are harmful to their business when asked about their sentiment towards the government's handling of the economy.
KBIS also conducted a sector-specific analysis for 13 different sectors across the economy to look at contrasting issues and found the following as most hurting:
• 36% of retail have suspended operations, while 46% had a revenue drop by more than 50% but were still operating when the survey was conducted
• 39% of construction, contracting, architecture have suspended operations, while 31% had a revenue drop by more than 80% but were still operating when the survey was conducted
• 46% of Professional Services have suspended operations, while 37% had a revenue drop by more than 50% but were still operating when the survey was conducted
Almutawa concluded, "It is crucial now more than ever to give voices to these businesses that continue to suffer in the midst of the lockdown policies, as 45% of businesses have suspended operations while 61% are suffering from working capital drain, the majority of which don't expect to last for another 2 months.
“The business environment as we know it is going through unprecedented and constant changes, and with the implementation of the full lockdown, we anticipate worsening figures across sectors in the coming few months. We hope this report positively contributes to the national conversation and equips policymakers with needed information to make timely and constructive decisions." —PRNewswire
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