Thursday, July 2, 2020

Survey Finds Iraqi Businesses Seriously Effected By COVID-19 Outbreak

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In April 2020 the International Organization for Migration (IOM) did a survey of 456 business in Anbar, Babil, Baghdad, Basra, Diyala, Kirkuk, Maysan, Najaf, Ninewa, and Salahaddin to see how they were being effected by the Covid-19 pandemic. It found that almost all were having severe problems with maintaining their workforces, production and sales, paying bills, and keeping up profits.

The IOM looked at small and medium sized firms in construction, food and agriculture, services, wholesale and retail. It found that from March to April they had a 40% drop in their workforce and a 52% drop in production. 86% of the companies believed that their future production would be down as well. 71% of their sales were affected. Only 48% of the 456 businesses were able to pay their rent, while 61% saw at least one of their bills increase in April. As a result 76% of the enterprises cut working hours, and there was a 36% average cut in salaries. 77% of workers were also being told to stay at home. Overall, these businesses averaged $80,000 a year in earnings, but in 2020 they are estimated to make $61,000, a 24% decline. The Iraqi government has had a haphazard response to the coronavirus. It has ordered shut downs and then eased off and then reinforced them. Hundreds of people in Baghdad city alone have been arrested each day for not following the new rules. Still the virus and government response has had a major impact. With Covid-19 spreading to new heights the domestic economy is likely to decline even more.

The IOM survey also broke down each category of business. Construction is doing the worse with a 52% cut in employment and 68% reduction in production. The average number of workers went from 5.0 to 2.4, while profits are expected to go from $37,000 a year to $28,000. Wholesale and retail are not doing as bad with only a 21% drop in employment and 18% decline in production. Food and agriculture and services are in the middle. The former had a 45% drop in employment and a 61% decrease in production, while the latter faced a 39% reduction in workers and 57% cut in production. It makes sense that construction and farming have been hit the hardest. Their work is out in the public and therefore more effected by the government shut down. In comparison, many businesses within urban areas like retail have remained open despite the new rules. Again, that may change as the authorities become stricter with the spread of the virus.

Business Overall
40% drop in employment
52% drop in production
Yearly profits expected to go from avg $80,000/year to $61,000 in 2020

Construction
52% drop in employment
68% drop in production
Number of employees went from avg 5.0 to 2.4
Yearly profits expected to go from $37,000/year to $28,000 in 2020

Food and Agriculture
45% drop in employment
61% drop in production
Number of employees went from avg 8.5 to 4.0
Yearly profits expected to go from $119,000/year to $86,000 in 2020

Services
39% drop in employment
57% drop in production
Number of employees went from avg 3.2 to 1.6
Yearly profits expected to go from $23,000/year to $18,000 in 2020

Wholesale and Retail
21% drop in employment
18% drop in production
Number of employees went from avg 4.0 to 2.8
Yearly profits expected to go from $128,000/year to $106,000 in 2020

SOURCES

International Organization for Migration, Enterprise Development Fund, “Impact of COVID-19 On SME’s In Iraq,” May 2020

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