Impact of Corona Virus on Startups

April 27, 2020

After the announcement of lock-down by PM KP Sharma Oli on 24th March to contain the corona virus, most business were bound to close whereas a few are still operational through home. With the country’s crumbling economy, it is no surprise that COVID-19 has heavily affected the start-ups, small enterprises and medium enterprises.

However, the start-ups based on essentials production and delivery are struggling to maintain the supply and demand chain. The start-ups that provide online payment and shopping are on the rise in Nepal. The people who were reluctant to use online payments and online shopping are now using its services as they are not left with many choices. The users are getting the opportunity to familiarize themselves with the online systems, maybe this could help these businesses flourishing in the upcoming days even-after the end of lock-down in the country.

Meanwhile, there are still many other start-ups and businesses in Nepal who have opted for the force majeure clauses to get out of the contracts and many interns and short-term contract workers are being terminated indefinitely. Whichever the case, the small start-ups and enterprises like ourselves, are likely to face problems in the operational cash flow for two-three months.

On top of it all, the government has announced that the business will have to pay wages to daily wage workers. With productions completely stopped and sales almost turned to nil, most businesses in Nepal are suffering the worst.

To provide relief to some businesses, the government has announced that employers will have access to the organization-level welfare funds to make payments to their employees until the resumption of the businesses and for the businesses affiliated to the Social Security Fund, the Nepal Government will deposit the amount contributed by the employers as well as the employees for the month of Chaitra. However, for start-ups which are not entitled to government welfare funds might face the imminent crisis in future.

Ashmita Thapa
Ashmita Thapa