In March it is going to be two years since the first people officially got infected with Covid-19. This caused great panic among the citizens. The whole country went on lockdown very quickly.
In addition to the health consequences, which are the most important, major consequences were caused to Kosovo's fragile economy. The sector of the economy has continuously faced various and numerous challenges over the years, which have endangered and are endangering its functioning. Because of this situation, many people became unemployed, and the poor became even poorer.
The impact of the Covid-19 pandemic on the economy, namely the challenges of local businesses and what policies should be undertaken to improve the situation, was the topic discussed at the next salon organized by D4D and KAS.
The challenges posed by the pandemic are multidimensional and have multiple implications for business development. These challenges will accompany businesses in the years to come.
The Covid-19 pandemic in particular has hurt new businesses. As a result, some of them have been extinguished. Whereas, businesses that have had a longer period of operation, have been more stable.
Data from the Kosovo Business Registration Agency (KBRA), show that during 2020 1 thousand 346 businesses were closed.
According to a research of the Kosovo Chamber of Commerce, conducted with 250 business representatives in the period March 2020 - March 2021, it results that the most affected sectors are gastronomy with 66.4%, wholesale trade 9.3%, retail trade 7.5%, production by 15.6%, while others make up 0.9%. The sectors that have benefited the most from this situation turn out to be pharmacies and food markets with 70.8%, productivity 8% and construction with 1.9%. In damaged businesses, respondents stated that they have reduced the number of employees from one to five people.
When asked by business representatives how the Covid-19 pandemic generally affected doing business, 27% said it had an extremely bad effect, 23% said it had a bad effect, 40% said it had a somewhat bad effect, 7% said that it did not affect them and 3% stated that it had a positive impact.
In this aggravated economic situation, the Kosovo diaspora has had a very positive impact. The financial support they have given to their families in Kosovo has had a significant impact on socio-economic stability. During 2020 alone, the diaspora has sent over 1.2 billion euros. Also, the arrival of a large number of them during the summer of 2021 has given a positive impetus to the economy of Kosovo.
In order to have a greater impact on the economic development of the country, it is necessary for the remittances of the diaspora to be channeled into various investments, and not to be spent on expenditures only for consumption needs. We also need to learn more from the diaspora about work culture and how to do business.
The Need for Government Support
Taking into account the above findings for the difficult situation in which businesses have gone and are going through, it is necessary that they have the support of the Government of Kosovo.
Since the pandemic began, Kosovo has changed three governments. This has led to delays in preparing packages to help the private sector. So far, three fiscal packages have been allocated. Their goal was to increase the liquidity of local companies, especially manufacturing and exporting companies.
But now their effects cannot be assessed. More time should be spent looking at the results that businesses have had. These packages have been prepared quickly due to the emergency situation and of course their implementation may have stalled. In this context, businesses have had various complaints regarding these packages. The biggest criticism was during the Hoti government, when the financial support went mostly to the big markets (due to the large number of employees), while it is known that this type of businesses did not have losses, on the contrary, they had more profit. more than usual. This is due to the fact that at the time of complete isolation, citizens bought products, especially basic ones to keep as reserves.
It is therefore important to make an analysis of the sectors that have been hit hardest and to provide support on the basis of this analysis. Despite all of this, a positive effect has come out of this situation. Many workers who have been unregistered have been formalized, as this has been a condition for taking advantage of fiscal packages.
In this period when new variants of Covid-19 are emerging and there may be a new wave of infections, Kosovo's economy may suffer another blow. It is therefore necessary to support the private sector, as this sector determines the economic development of the country.