As the Coronavirus (COVID-19) Pandemic painfully kills innocent individuals globally, it seems to be taking powerful blows at the global economy, knocking down start-ups without the financial wherewithal to stand against its powerful blows.
As the human toll grows, the economic damage rises. Global Economic Prospects reports: “COVID-19 has triggered the deepest global recession in decades.” According to the baseline forecast, an estimate of future demand based historical demand global GDP is expected to see a 5.2% drop in 2020.
However, governments of different countries are taking steps to contain the human and economic impact of COVID-19. Côte d’Ivoire, for example, declared a state of emergency after its first confirmed case was recorded on March 12 2020. Schools, nightclubs, bars, and theatres were closed.
As the containment measures were relaxed and normal economic activities continued, the regional central bank, BCEAO (Central Bank For West African States) and West African Economic and Monetary Union (WAEMU), according to the IMF, began a collateral framework, to help refinance 1,700 private companies. Also banks and microfinance institution customers who had trouble servicing their debts as a result of the Pandemic were given a 3 months window without the need to service their debts and without incurring any penalties.
In Ghana, the MPC (Monetary Policy Committee) provided relief funds for small depository institutions.
Nigeria’s CBN (Central Bank of Nigeria), created a N50 billion ($139 million) targeted stimulus package to support households and MSMEs impacted by the heavy blows of the COVID-19 Pandemic.
Despite these efforts, the Pandemic still plunges the global economy into a tragic recession. It becomes apparent that COVID-19 will leave lasting scars as human lives are lost, and as the globe plunges into an economic downturn. The cost of the Pandemic has been put at $2 trillion globally
As the Pandemic ripples through the USA with about 5.2 million confirmed cases (as at 12th August) unemployment reaches an all time high. In the UK, the worst quarterly fall since Q3 of 1979, was recently recorded.
In more vulnerable economies, the impact is bad and is bound to get worse. As Nigeria sluggishly recuperates from the 2014 oil price shock, another steep decline in oil prices undermines the little progress made in 6 years. The budget for the 2020 fiscal year was prepared with significant revenue projections of about 20%, but the realities of COVID-19 have called for a review of expected earnings.
As the pandemic knocks out businesses and cripples industries, some businesses are, however, thriving.
Amazon, Facebook, Zoom, etc are all witnessing tremendous growth as a result of the Covid-19 Pandemic
One of these businesses is Amazon. It announced a profit of $5.2 billion for the 1st quarter. Ironically, the US announced an economic growth collapse on that same day. Macy’s and Niemen Marcus, retailers like Amazon, have laid off workers in their thousands.
Facebook saw a 10% increase in revenue, $18.3 billion in the second quarter. Apple surpassed Wall Street expectations with a revenue of $59.7 billion.
Popular video conferencing app; Zoom, recorded great revenue as the customer base grew by 354%. $328.2 million was recorded as the company’s revenue in Q1 of year 2020.
Popular content streaming service also recorded some very interesting numbers. It added 15.77 million International subscribers massively surpassing the 7.2 million predicted by Wall Street. With over 182 million subscribers worldwide, the company saw a $5.77 quarterly revenue.
Restriction to movement has been a major reason for the huge turn overs recorded by these businesses. Internet usage increased by 70%, while streaming went up by 12%.
People look to the internet for entertainment, connection, income generation and the likes.
WhatsApp has seen 40% increase in usage. As ability to socialize physically reduces, these platforms provide an opportunity for humans to keep in touch.
As the Pandemic deals severely with economies, households and small businesses, tech giants profit off our desire to remain sane through the pandemic.
Are they all Winners?
It is not all fireworks and celebrations for every tech company. While some have been raking in big bucks because people have been stuck in their houses, others thrive on people actually leaving their houses, and quite a few companies are in this situation.
Uber: Uber Technologies Inc., popularly known as Uber, has not been recording impressive numbers, unlike its other tech counterparts.
The ride-hailing app has seen a major decline in active customers. Uber now has an average of 55 million customers each month since the pandemic, a massive drop from 99 million last year.
When the lockdown was at its worst, Uber had an 80% decline in business. 3,500 employees were laid off over a “Zoom Call” by the company as a cutting-cost measure. Though the medium of delivering such a sensitive subject has been considered callous by some, it shows how badly the Pandemic hit the company.
In spite of the fact that the company’s ride hailing business has been slow with fewer people booking rides, the company’s food delivery service recorded a boom during the pandemic. As its core business dropped, Uber concentrated on its food delivery business to alleviate the core business beatdown.
Airbnb: The online marketplace for vacation homes, took some heavy blows from the pandemic. Apparently, the hit was so bad that it had to lay off employees.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” CEO Brian Chesky tells employees.
Airbnb had to freeze hiring and cut executives’ salaries. The Wall Street journal reported that the company had already lost $322 million last year after ramping up spending due to 2018’s profit.
Laid off workers received one year health care, 14 weeks of base pay, one additional week for every year they worked at Airbnb.
Both sides to the COVID-19 Pandemic are just as brutal. Human losses are devastating, and economic losses are just as terrible. Though reports come in numbers and statistics, the pain, however, is inestimable.