Private sector hurting as Covid rages on
“WHAT YOU HAVE is that commerce has been significantly impacted,” stated Dominic Sutherland, Managing Partner of Hinds and Wilson Chartered Accountants in an interview with SEARCHLIGHT. He was speaking on the impact which the coronavirus pandemic is having on both the private and public sectors.
Having a very close professional relationship with many of the businesses in Kingstown, Sutherland said that in the absence of exact data, “I can say off hand that apart from the business of government… we have several businesses in Kingstown which have had to close their doors for between a couple days to the entire week, and you still have persons who have not been able to resume their operations because they are waiting on results, [of covid tests],”said Sutherland who works closely with several businesses in the capital.
He said there are businesses which have had a significant falloff in general patronage, and those business owners face a significant challenge. Although most if not all of the business owners are fully vaccinated, “getting their workers to be vaccinated is a significant challenge. Most workers are extremely hesitant, backed by incorrect data and information, but empowered because they know the only recourse that these entrepreneurs have is the route of moral persuasion. It is the rank and file employees who are vaccine hesitant.”
Sutherland said in conversation with business owners and managers, he has found that “If an employee refuses to go and get vaccinated, they are now showing up at the business place with Covid, and all they expect is to be given sick leave.”
Sutherland who contested the Central Kingstown seat for the Unity Labour Party in the 2020 General Elections, said that scant attention it paid to the fact that the enterprise itself loses.
“The impact is significant. The level of patronage or activity within the town itself has been significantly reduced, which means that the amount of cash flow passing through is now significantly less than it normally was,” added Sutherland.
“This obviously creates problems with respect to businesses being able to service their debts. A lot of these businesses have found themselves in situations where they have over- stocked their business, for a back to school that never happened.”
Last year when the pandemic broke, commercial banks and other lending institutions extended a moratorium to customers on their loans for a period of six months; similar offers were granted to businesses for commercial loans.
Many businesses are burdened with settling debts on items they have not sold, and soon may begin to extend their payables, the former police officer now chartered accountant, pointed out.
“What we have is a significant debt portfolio for these banks that need to regain their active status or their performing loans. We have to make sure that after the moratorium, these loans continue to maintain their status as performing loans. But the ability to service these loans with the significant challenge of covid now being experienced is a major challenge all round,” Sutherland said.
“It is not that businesses have closed. At the end of the day there is a debt to be serviced, that must be serviced, overheads to be financed, and the inputs towards servicing these debts have reduced significantly. Sales are down, commerce is down. The challenge now for the financial institutions is how far they can go with clients who obviously would have been with them for a significant period of time, but are still experiencing challenges in today’s Covid climate which is shutting down businesses, with significant revenue loss,” he noted.
Sutherland said that he has had many conversations with residents and businesses of Central Kingstown, and the major reasons for the vaccine hesitancy is “Health and religious. Employers have been trying to work with the Ministry of Health to create groupings that they can speak to, that they can get vaccinated.”
The real worry for private sector employers is that “you have very good workers who have been with your institution for years, who have significantly contributed to the development of these institutions. You do not want to part with them. A lot of small businesses when you combine their total, you realise that they are significant employers, but they are small in their individual operations.”
These small businesses are finding it difficult to retrench staff because there is a level of ability of the current workforce, and the available replacement pool of human resource is not vaccinated.
He said “Employees are looking at the situation that they have nothing to lose at this point…”
He commented that “back to school in itself is a driver for economic activity, and the business sector did not experience that level of activity over the past few weeks.”
He sees a significant drop in revenue for the private sector noting that “school reopening should have been an injection to stimulate activity.”
Sutherland said that salaries have been consistently paid in both the public and private sectors, and sacrifices have been made by employers to ensure that the employees are not retrenched despite the loss of revenue, as employers have kept the faith using cash flow, not profit ,to keep their employees at work.