MADE. Quito is a city where there are many entrepreneurs
The robberies and extortions are now added to the attacks with car bombs. The risk is that the vicious circle of more violence and less employment will be triggered.
During the first half of 2023, sales in the Quito economy totaled $42,015 million. This represented 3% more, or an additional $1,033 million to the $40,982 million reached in the same period of 2022.
In 2021, with the rebound from the pandemic fall, the growth rate was in double digits.
Growing insecurity, with robberies, extortion and now bombing attacks, has slowed down and hit Quito’s economy.
Pedro Romero, director of the Master’s in Economics at the San Francisco de Quito University (USFQ), explained that crime generates an escalation of actions in which clients decide not to go out or go out less, avoid places very distant from their homes and postpone purchase and investment decisions.
This in turn makes businesses sell less, buy less from their suppliers and even ask for less credit due to uncertainty. “If you are not sure that your job will remain or that your business will remain, even if they call you to give you the credit you have been looking for for a long time, it is most likely that you prefer not to make new investments or expansions”, said.
Thus, in many cases the slogan is to keep what you have and hope that things improve with the change of government at the national level.
According to data from the Association of Private Banks (Asobanca), between January and July 2023, the productive sectors and the citizens of Quito requested $6,024.5 million in loans. This meant $89.2 million less than the $6,113.7 million registered in the same period of 2022.
There is an economic blow and a drop in investment, but the city is not completely paralyzed.
The slogan is not to lock yourself
Diego Vivero, representative of the Pichincha Restaurant Association, pointed out that nothing is gained by locking yourself in the house. On the contrary, the authorities should be required to fulfill their duties.
The latest events reflect the call for attention from criminal groups at a time of political transition that threatens them.
“What happened yesterday with the car bombs, honestly, is a bucket of cold water and could cause the people of Quito to consume less and want to stay at home. That doesn’t solve anything. We have to be aware that there are more of us who are good and we must unite to help each other, especially to demand that justice do its duty,” he said.
In sectors such as restaurants, they still have sales levels up to 20% below pre-pandemic levels. However, a substantial improvement in economic movement had been registered during July and August 2023.
The two car bombs exploded in less than 24 hours could cause a sudden stop just when things began to look better.
According to Vivero, justice is the one that has most failed businesses in Quito. Businesses and restaurants that have been subjected to extortion and robberies have felt permissive with criminals in the courts.
“We have had to expose ourselves face to face with criminals and put the safety of our families at risk. The judicial system has left us defenseless, ”he stressed.
What can be done?
Romero said that businesses such as restaurants, stores, pharmacies, among others, could improve their delivery service channels.
On the public side, the municipality could be made to reduce the payment or give a year of grace on the property tax or other taxes and fees.
There are no immediate solutions to create employment, but Romero believes that the next government must take radical measures. This in the sense of a strong announcement. “If people see that the decision is going in the right direction, investments and the hiring of personnel can be reactivated,” he asserted.
The bet, according to the USFQ professor, should be a radical change in the labor legislation that Ecuador has.
“It must be made more flexible and give options for hourly work, especially for young people,” he said.
All efforts must aim to cut one of the main breeding grounds for crime: the lack of job opportunities. (JS)
Quito tiene más de 170.000 empresas activas, sobre todo micro y pequeños negocios.
Incluso antes de la escalada de inseguridad, Quito recibía 10 veces menos inversión externa que otras capitales de la región. Esto puede empeorar con la situación actual.
Impacts of insecurity on business
- Decreased customer traffic: The perception of insecurity can discourage customers from visiting businesses.
- Reduction of the frequency of visits: Even if customers continue to visit the business, they may decrease the frequency of their visits.
- Shorter residence time: Customers who feel insecure may want to spend as little time in the business as possible. This reduces the likelihood that they will explore different stores or make additional purchases.
- Impact on tourism and visitors: Potential visitors may avoid areas they perceive to be dangerous, which in turn affects businesses that depend on the income generated from tourism.
- Closing of business: If insecurity persists and worsens, some businesses could be forced to close due to lack of sales.
- Increased security costs: Businesses may be forced to invest in additional security measures, such as surveillance cameras, security guards, and alarm systems. These additional costs can affect profit margins.
- Difficulty attracting talent: Businesses in unsafe areas may face challenges recruiting and retaining talented employees, as workers may prefer to avoid areas they consider dangerous.
Evolution of sales in Quito