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Startups struggle to stay afloat in MENA region as COVID-19 continues

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Startup covid-19

As COVID-19 pandemic continues to spread, 71% of startups in MENA (Middle East and North Africa) region are struggling to stay afloat, according to a report by Arabnet and Wamba. 

According to a recent study in the region, the researchers analyzed the impact of global pandemic on various startups and small scale businesses economically. The study included startups in countries of Middle East and North Africa region, including Morocco, Kuwait, Saudi Arabia, Jordon, Libya and Egypt. 

The report indicates that approximately 22% of startups in the MENA region have suspended all their commercial activities. On the other hand around 21% of startups indicated significant loss in business as a result of drop in the demand.

The travel sector is the most affected amongst all startups, with travel restrictions due to pandemic. The mobility sector alone reflects 25% of companies being shut down in the region. Furthermore, about 50% of mobility sector startups have reduced or closed their operations and 33% have reported a drop in revenue of around 75% to 100%.

Most of the startups in MENA region are suffering with lost funding and also problems with bank loans. 

The travel restrictions being imposed due to COVID-19 pandemic has led to huge business losses for startups as the supply chain is being impacted. 

The research conducted by Arabnet and Wamba also includes the measures these startups are taking to tackle losses due to pandemic restrictions.

More than 58% of startups have adopted working from home to cut down overhead costs. About a quarter of businesses have cut down their prices to mitigate the financial impact of global pandemic. 

About 20% of the companies are trying out new business models and out of the box marketing techniques. 

Many startups have been forced to cut down their workforce or have enforced unpaid leaves for employees. About 8% of startups have also reduced the salaries to make up for the losses. 

While many companies and startups are facing the brunt of pandemic, there are some sectors that are reporting growth in business and profit. 

Edtech (educational technology) startups and e-grocery companies have witnessed massive growth and profits. 

About 47% of these companies have reported a jump in revenues as students are attending online schools and people are avoiding shops and buying groceries online.

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