Kuwait instituted the lockdowns to reduce the spread of the COVID-19 virus last March, 45 percent of Kuwaiti business owners said they have suspended or shut down their businesses.
Another 26 percent are on the verge of collapse after seeing their revenue drop by more than 80 percent revealed a Kuwait Business Impact Survey (KBIS) published by Bensirri PR (BPR), an independent corporate, financial and political communications firm based in Kuwait.
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The report is the only COVID-19 related Business Impact Survey conducted in Kuwait and is available in full and free of charge on KuwaitImpact.com.
Key survey findings show, business closure rates are high, more closures expected and to date 45 percent of respondents have suspended or shutdown their businesses.
Another 26 percent on the verge of collapse after seeing their revenue drop by more than 80 percent. With total lockdown in place in Kuwait since May 11, more closures are expected.
Other findings include delay in legislation which led to acts of survival in violation of existing laws in a desperate act of survival, 32 percent of respondents have adjusted employee hours or salaries in clear violation of Kuwait’s labor law while 15 percent have already started laying off staff instead of waiting for legislation to pass as Kuwait enters its third month of the crisis.
The shops have closed, expenses remain the same and government support is absent to a large extent. Now in their third month of working capital pressure, 56 percent of business owners/CEOs say they cannot afford to cover their fixed costs for another two months under the new status quo. Kuwait BIS says the most impacted sectors to date are retail, contracting, and professional services (measured by revenue drop and status of operation).
The 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 author of 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,” he added.
When asked about their outlook on market recovery, 45 percent of Kuwaiti business owners expect slower economic activity to extend into 2021. While 52 percent said it will take up to two full years for revenue to return to 2019 levels. The survey also found that only 15 percent of business owners are fully aware of the economic stimulus package announced by the Kuwaiti government, and 81 percent 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: The survey shows 36 percent of retail have suspended operations, while 46 percent had a revenue drop by more than 50 percent but were still operating when the survey was conducted.
It also shows 39 percent of construction, contracting, and architecture have suspended operations, while 31 percent had a revenue drop by more than 80 percent but were still operating when the survey was conducted.
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