Sierra Leone: Businesses have had a hard time repaying loans and some 26 percent of all firms in Sierra Leone had already fallen in arrears on outstanding liabilities at the time of the survey, an additional 23 percent were expected to soon fall in arrears.
This is according to the findings contained in the COVID-19 Business Pulse Survey (COV-BPS) undertaken by the Sierra Leone Economic Diversification Project, which is aimed at providing critical information to help policy makers monitor the effects of the pandemic on businesses.
Other constraints include reduced availability of finance and supply chain disruptions which made it more difficult for firms to access inputs and raw materials for their operation with travel restrictions and border closures being the common reported reasons for difficulties in procuring raw materials.
The BPS was implemented in Sierra Leone in 2020 to obtain information on the population of formal and informal firms. 516 firms were interviewed by an independent research firm in June through September 2020.
The sample is stratified across size, sectors, region and formality status. The Government of Sierra Lone is represented by SMEDA, Ministry of Finance, and Statistics Sierra Leone. The World Bank team provided technical assistance in implementation of the survey.
Firms in ICT, entertainment and recreation, transportation and storage sectors experienced the greatest fall in sales, while firms in construction, utilities, health, and agriculture sectors experienced the least. In terms of cash flow, more than 90% of firms in Sierra Leone reported a decrease in cash flow resulting from the impact of lockdown measures and the demand slowdown.
There is a concentration of firms in the construction and utilities sector that appears to have better weathered the impacts of the pandemic: approximately one-fifth of firms in the construction and utilities sector actually experienced an increase in demand and cash flow during September 2020 as compared to the previous year.
As per labour, firms were much more likely to make adjustments to their labour force at the intensive margin (i.e. reducing hours or wages) versus the extensive margin (i.e. firing employees). In the month of September 2020, a larger share of firms reported to actually hire new workers (26 percent) compared to the share of firms that laid-off workers (15 percent).
Technology wise, almost one-third of businesses in Sierra Leone have either started using or increased their usage of digital technologies for marketing since the onset of the pandemic. Approximately 15% of firms in Sierra Leone changed their product or service in response to the pandemic, with about one-third of these firms making adjustments towards health-related products or services.
In terms of government support, only 5 percent of firms in Sierra Leone report to have received national or local government response during the pandemic. The only sector where a substantial concentration of firms have received support is the accommodation sector where 34 percent of firms report as having received support.
Most firms report not being aware of any government support measures, as the main reason for not having accessed support. In the future large firms look towards having more access to new, subsidized credit, with 60 percent of large firms indicating this as the most needed policy measure.