The current disruptions in businesses due to the various mitigation measures put in place to reduce the spread of the coronavirus will impact heavily on businesses hence the need for the government to cushion them.
According to investment advisors Cytonn, the government should assist businesses and affected sectors with, credit facilities and payroll forestal their closure and job losses.
The work from home push, closure of restaurants and clubs, and the curfew resulting in reduced working hours has forced some businesses to lay off workers or send them into unpaid leave for an unspecified period.
The Ministry of Industrialization, Trade and Enterprise Development has so far set up the Business Emergency Centre to address challenges that may require quick action.
Industrialisation CS Betty Maina advised the business community to take advantage of the reduced government levies and fees to, improve firms’ cash flow.
Cytonn is urging the government to set up an asset-backed loan facility for businesses in the affected sectors such as the tourism sector which is the most affected with the ongoing travel restrictions.
Large employers could also get the credit facility which would go towards payroll support with the aim of reducing the expected job losses.
The government in support to cushion the effects of the virus could waive business rates for small firms and give discounts to larger ones for a period of three months.
According to Cytonn Providing time extensions of up to 90-days to businesses with regards to the submission of returns and tax payments can help alleviate cash-flow challenges being faced in the economy.
Giving fiscal incentives such as waivers on levies charged to businesses such as the catering levy in the tourism industry could also assist the industry.
Under the Tourism Act, persons engaged in the provision of tourism services are required to charge a tourism levy at a rate of 2 per cent of the gross sales.
Further, hotels and restaurants are also required to charge a catering levy at a rate of 2 per cent of the gross sales.
Section 106 of the Tourism Act allows the CS for National Treasury to grant certain fiscal incentives to promote the development of sustainable tourism, including waivers and rebates to persons engaged in the provision of tourism services, hotels, and restaurants.
Keeping these businesses alive will ultimately aid in a faster recovery once the situation is under control.
