How have attitudes shifted since the outbreak of the pandemic?
Government policies should be based on the answer to this question. Decision makers should understand the nature of problems that businesses have already encountered, their expectations moving forward and areas of support they require. This will ensure that recovery measures are business-centric.
The insights from PwC Georgia’s recent surveys outline the real sentiments of local businesses and how their challenges have shifted throughout the pandemic. We conducted two online surveys: one of businesses "first" reactions to the pandemic, and a second on their “follow-up” reactions and adjustments four months later. Understanding how sentiments have shifted over time can ensure new policies take into consideration how businesses are adapting and that they address specific needs.
Over time, we have seen a change in the nature of problems and expectations. While the initial survey showed a sharp drop in demand as a key challenge, companies also cited exchange rate fluctuations, late payments and the closure of external borders in the second round. But as the surveyed businesses adjusted to the new reality, supply chain disruption has become less problematic, for example.
The survey results were descriptive of the main problem areas and clearly identified the causes of difficulties that companies are facing. Results were shared with the government, IFIs (International Financial Institutions) and the intentional business community.
Although problems associated with the COVID-19 pandemic are a temporary occurrence, its consequences on the economies and businesses will have longer-term implications. In order to mitigate the longer term implications, governments need to fully understand what impact the virus is having on businesses in Georgia.
Based on our survey findings, the key areas that governments need to address are liquidity losses, strain on cash flow, and difficulties on the foreign market. They can do this by:
Helping businesses obtain financing to cover their immediate liquidity issues
continuing deferment of taxes to enable companies to concentrate on retainment of employees and continuation of operations
and introducing new policies and attraction mechanisms to strengthen the investment climate and attract foreign capital to the country.
We have already seen that these types of measures can support companies. Following tax deferment, salary subsidies and co-financing mechanisms of the state, fewer companies said they would have to suspend activities. In the first survey, almost half of the respondents said they had to suspend activities, compared to under 20% in the second survey.
Beyond the immediate measures governments should take, there are three overarching takeaways for public sector transformation:
Digital flexibility is crucial to enable business operations during lockdowns
Online presence allows some continuation in sales and revenue generation
Continuous monitoring of consumer needs is important to accomodate to rapid changes.
As consumer habits have shifted online due to restricted mobility, companies need to respond and adapt to their needs. Companies that already had an established online presence saw less decline in demand. Those that did not have the resources to implement remote working, on the other hand, suffered setbacks. Both of these points highlight the importance of digital flexibility. As governments look to rebuild their economies and society, support for companies’ digital transformation and upskilling should be at the forefront.
The key challenges we see in Georgia are related to closing businesses and rising unemployment, which are common across the region. Lessons learned from this survey can therefore be applied to the region as a whole. But what the specific measures look like should consider the local climate in each country.
Both surveys were conducted via an online questionnaire,and the second one also included in-depth interviews with the large size companies. The questions covered: current COVID-19 related difficulties, companies’ actions related to combating the effects of the virus, financial liquidity, businesses' predictions regarding the development of the situation in their companies, utilisation of the government initiatives and supply chain-related problems.