Sarajevo — Impacts of the COVID-19 pandemic are widening and deepening in Bosnia and Herzegovina, with almost half of survey respondents in hard-hit sectors saying they expect their businesses will close within three months, a new UNDP impact assessment finds.

The accommodation, food service, and transport sectors have suffered the worst initial blows, while the textile and fabricated metals sectors have suffered the worst supply chain disruptions, the study finds. Indirect impacts are expected to slam the entire economy, with firms in all key sectors projecting sharp declines in the coming three months.

In accommodation and food services, 43 percent of firms said they would have to cease business completely in three months—while information and communications technology firms project growth. Smaller firms in other key sectors were less prepared to deal with the initial COVID-19 economic fallout. Larger firms with broader, more developed supply chains will suffer greater external shocks.

Among workers, young people and unskilled laborers are suffering most, while female workers and female business owners appear to have been hit harder by lockdowns to contain the virus than their male counterparts. This partially reflects the larger proportion of women employed in the most directly impacted sectors, particularly accommodation and food services, the study finds.

This new assessment will inform policy and program responses to the pandemic.

The International Monetary Fund has estimated that Bosnia’s economy will shrink by 5 percent in 2020 because of the pandemic. But COVID-19 could still yield new opportunities for cleaner, more sustainable, and more inclusive growth.

“The pandemic is forcing many countries to rethink their development paths and visions,” Steliana Nedera, UNDP Resident Representative in Bosnia and Herzegovina, said.

“Many, including Bosnia and Herzegovina, could emerge stronger and more resilient by recognizing and investing in the potential of their domestic economy. Yet this new reality demands a ‘new deal’ response, with cooperation among all levels of government and key stakeholders.”

The disruption of trade routes and supply chains has created an opportunity for domestic companies to step in and to grow. Improving the business climate and expanding strategic investment in the tourism, agriculture, food, green energy, and IT sectors could create thousands of jobs and ensure sustainable development locally and nationally.

While providing vital medical supplies and building back greener and better, UNDP has tapped the private sector, international financial institutions, and donors to support recovery efforts and achieve the Sustainable Development Goals (SDGs), Nedera said.

The study recommends, in responding to and recovering from the pandemic, that Bosnia and Herzegovina authorities consider:

• Assessing value-added tax (VAT) relief schemes and greater subsidies for social security contributions, salaries, or personal income tax relief for cash-strapped businesses.

• Leveraging private-sector and government innovation in the short term.

• Helping businesses adapt and innovate to enable digitalization and online distribution channels.

UNDP on the ground

With support from donors and Bosnia and Herzegovina authorities, UNDP is delivering 2.9 million vital medical supplies and pieces of equipment, including ventilators, personal protective equipment (PPE), COVID tests, and EKG and X-ray machines as part of the joint UN response.

To date, 2.1 million items have been delivered to health institutions countrywide, including 32,500 COVID-19 tests, 15 EKG machines, 10 ventilators, five X-ray machines, two CT scanners, seven new 3D printers to produce face shields, 1.18 million face masks/ particulate respirators, 21,250 face shields, and 1,000 locally produced protective suits. Relying on local producers has saved an estimated 700 local jobs.

UNDP and Bit Alliance meanwhile launched a digital COVID-19 response “ideathon” with more than 20 partners, including embassies, donors, government institutions, academia, and businesses. Based on popular votes and expert evaluations, six ideas—out of more than 100 submissions—were chosen for development and UNDP is facilitating their implementation. Bit Alliance is a national association of information technology companies.

And with the British Embassy, UNDP organized a first-ever conference on  Governments in BiH on the Digital Transformation Journey. It gathered more than 130 international and domestic experts and decision-makers online to share experiences in using new technologies in responding to COVID-19. They also discussed opportunities to improve public services and public administration using digital technology.