REGIONAL REPORT the persistent decline in sales and a prolonged pandemic episode risk permanent job loss for MENA firms . For example , while during the early stage of the pandemic ( i . e ., during July-August 2020 ), 26 % of firms in Jordan reduced their permanent workers , 39 % did so during November 2020-January 2021 .
“ The pandemic has negatively impacted 92 % of the firms in the West Bank and Gaza ( WBG ) and 89 % of the firms in Djibouti , Tunisia and Jordan . For most of these impacted firms , the sales have declined by more than 50 % from the pre-COVID-19 situation . This magnitude of firm-revenue loss in MENA is in line with what has been experienced on average by firms in developing countries .”
The declining revenue , they also reported , has left most firms in financial distress .
“ Nearly 90 % of firms in the West Bank and Gaza , 93 % in Jordan , 78 % in Tunisia and 72 % in Morocco reported a decline in cash flow . Financial distress seems to be The Burj Khalifa . most acute for smaller firms . Delaying payments to suppliers , landlords or tax authorities and being overdue on obligations to financial institutions have been adopted by most firms to cope with the declining cash-flow . Besides the financial distress , disruptions in transport and logistics and supply of inputs appear to be some of the key impediments that MENA firms face ,” they said .
Digital adoption rates
However , the COVID-19 pandemic has motivated firms across the developing world to leapfrog and take advantage of digital technologies . The digital presence also seems to be an essential coping mechanism for a significant share of firms ( 20-30 %) across MENA ’ s surveyed countries . Increased use of the internet , online social media , specialised apps or digital platforms seems to be some of the firms ’ essential tools to continue business operations , sales or supplies ( according to Nadir Mohammed , Djibrilla Issa and Aminur Rahman ).
The authors point out the gap between micro and small firms and the large firms in digital technology adoption , which ‘ is the highest in MENA ’.
“ Several structural impediments in many MENA countries are likely to inhibit firms ’ digital technology adoption and innovation . These include a high degree of informality , particularly among the micro and small firms , lack of digital payment solutions and services , underdeveloped and
The digital presence also seems to be an essential coping mechanism for a significant share of firms ( 20-30 %) across MENA ’ s surveyed countries
costly digital infrastructure ( contributed by lack of competition in the network industries ) and the lack of domestic competition and export competitiveness that reduces the incentive to innovate ,” they said .
Policy support in different MENA countries enabled firms to avoid falling into arrears and cope with uncertainty . Well-targeted , time-bound and effective policy support will be needed to keep smaller MENA firms afloat and able to navigate the turbulent waters of COVID-19 shocks .
MENA growth projections
“ Progress of the vaccine rollout varies widely across the region , with some countries ( like the GCC ) in advanced stages , while others are lagging behind as widespread inoculation is not expected until ‘ 22 or ‘ 23 . Fragile and conflict-affected states , especially those with low incomes , face a particularly difficult path ahead , given their limited vaccine access and ongoing instability . Economies that are heavily reliant on contact-intensive sectors , especially tourism , will recover more slowly . Countries that did not implement strong policy support in the wake of the pandemic are now further behind on the road to recovery ,” commented Jihad Azour , Director of the World Bank ’ s Middle East and Central Asia Department , at a briefing in April this year .
“ Meanwhile , the rise of oil prices is helping the fiscal and external balances of oil exporters and supporting the recovery of the non-oil sector , although OPEC plus cuts are limiting their impact on growth ,” he continued .
Overall , Azour added , real GDP growth for the Middle East North Africa Region is expected to pick up to four per cent in 2021 . In the Caucasus and Central Asia , output is projected to rise by 3.7 per cent in 2021 , returning to its pre-crisis level . However , the outlook remains highly uncertain with the pandemic , vaccinations and available policy space all having a significant impact on individual country forecasts .
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