{"id":557655,"date":"2021-09-27T04:00:04","date_gmt":"2021-09-27T04:00:04","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/nurseries-are-struggling-like-never-before-as-covid-hits-profits-and-forces-operational-changes\/"},"modified":"2021-09-27T04:00:04","modified_gmt":"2021-09-27T04:00:04","slug":"nurseries-are-struggling-like-never-before-as-covid-hits-profits-and-forces-operational-changes","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/nurseries-are-struggling-like-never-before-as-covid-hits-profits-and-forces-operational-changes\/","title":{"rendered":"Nurseries are struggling like never before as covid hits profits and forces operational changes"},"content":{"rendered":"

<\/a> Nurseries are struggling like never before as covid-19 hits profits and forces operational <\/strong>changes:<\/strong> Emergency covid measures have taken their toll on Egypt\u2019s nurseries, which have been mired in uncertainty since the onset of the pandemic 18 months ago. Many have been forced to permanently close their doors, while others are fighting to stay afloat amid rising costs, industry figures say. So far, around half of Egypt\u2019s nurseries have remained closed since going into lockdown. <\/strong><\/p>\n

Education\u2019s most vulnerable sector?<\/strong> Nurseries are in a particularly precarious financial position because payments are often monthly, not annual like school payments, says Safia Trabelsi, owner of Nile River Montessori<\/a>. High employee-to-child ratios keep operational expenses relatively high. And online tuition isn\u2019t really an option for very young children, multiple sources have reiterated<\/a>.<\/p>\n

Small Talk<\/a><\/strong> saw its annual operational expenses rise 30-40% over last year,<\/strong> estimates partner Rana Nessim. Other nurseries report comparable increases. Small Talk\u2019s extra costs largely come from bringing in extra staff members to cover absences while continuing to pay full-time employee salaries, says Nessim. Regular employee PCR tests and rigorous sanitization measures also upped costs.<\/p>\n

Covid capacity mandates forced some to cut admissions:<\/strong> After closing nurseries<\/a> in March 2020, the government allowed them to reopen in July<\/a> \u2014 but at 50% capacity. \u201cOur income was slashed in half, because we had to cut admissions in half,\u201d says Nessim. Nurseries remain cautious about operating at full capacity, despite being permitted to since November. Small Talk is currently operating at around 50% capacity, Kinderparadies<\/a> at around 60%, and Fun Yard<\/a> and Kompass Kindergarten<\/a> at around 75%, say sources. \u201cThis definitely hit our profits as a business,\u201d says Fun Yard owner Laila Anwar.<\/p>\n

But refunds and staff raises still had to be paid: <\/strong>Because of the financial hit from increased costs and lower revenue \u2014 including requests for refunds during 2020 nursery closures \u2014 Anwar initially decided she couldn\u2019t pay annual staff raises this year. \u201cBut I felt this wasn\u2019t fair. So I gave raises because I don\u2019t have to make a profit every year. And it boosted morale a bit.\u201d<\/p>\n

Others had to stop operations entirely:<\/strong> Kinderparadies stopped operating altogether from April-September, says founder Mona Yacoub. \u201cI had to tell my staff to accept other employment offers if they had them.\u201d<\/p>\n

Even high-end nurseries had to consider whether reopening was worth the risk.<\/strong> \u201cWe considered not reopening last September, because we were worried about putting our staff at risk,\u201d says Nessim. \u201cBut we reopened because for our staff, this is their livelihood. And we know how important it is for children to get out, play and socialize.\u201d<\/p>\n

For those that did reopen, staffing issues have been a major challenge: <\/strong>\u201cWe wanted to maintain our high staff:children ratio, but we also needed to prevent outbreaks, so we asked staff to stay home if they felt even slightly unwell. It was a lot to balance. The costs of staffing have been incredible,\u201d says Nessim.<\/p>\n

Half of Egypt\u2019s nurseries have remained closed: <\/strong>Pre-covid, Egypt had some 15k licensed nurseries, with an estimated 10k still procuring licenses, sources at the Social Solidarity Ministry tell Enterprise. But only around half of these estimated 25k nurseries are believed to have reopened since September \u2014 mainly because demand was insufficient to make reopening financially viable, the sources add.<\/p>\n

So have nurseries upped their fees to compensate? Not during the thick of it: <\/strong>Many families were economically impacted by covid, so Kompass added just a little more to its annual 10% increase in 2020, to offset extra costs, says co-founder Carmen Ragab. This was after shareholders provided extra funding \u2014 which couldn\u2019t be repeated indefinitely, she says. Small Talk only applied increased rates to new families in 2020, says Nessim. \u201cChildren that started in 2019, whose families had paid for term three though we weren\u2019t open, paid the same rates in 2020.\u201d This year, the 10% increase is being applied across the board, she adds. Fun Yard applied its usual annual percentage increase to this year\u2019s rates, says Anwar.<\/p>\n

Few players are making use of the central bank\u2019s new lending program: <\/strong>The government announced in April 2021<\/a> that nurseries would be eligible<\/a> for all the benefits of the MSMEs Act, including some tax breaks and the chance to apply for a Central Bank financing initiative. Some 15-20 nurseries have received a total of EGP 10 mn in funding since then, Ahmed al Romeish, head of the Central Credit Administration at Nasser Bank, tells Enterprise. Loans range from EGP 20k - EGP 1 mn, with an interest rate of 5%, he says.<\/p>\n

None of the nurseries we spoke to had applied for the CBE loans,<\/strong> with most saying they prefer to avoid incurring debt. \u201cA group of us sent a letter asking for tax breaks this year,\u201d says Anwar. \u201cBut I wouldn\u2019t apply for financial aid.\u201d<\/p>\n

What else has made covid-19 so difficult for nurseries? When they had to close <\/strong>up shop<\/strong>, they couldn\u2019t shift online.<\/strong> Mandatory closures were very tough, says Nessim. \u201cWe\u2019d never had to operate online before. With small children, it\u2019s really hard to do any kind of distance learning. They need in-person stimulation.\u201d<\/p>\n

Some provided online support where possible: <\/strong>Small Talk and Fun Yard started YouTube channels to share online content, but live Zoom attempts were hit or miss. \u201cThe children and teachers missed each other, so we started doing little, fun Zoom sessions, not aimed at teaching. But attendance decreased as people got overwhelmed with homeschooling and working from home,\u201d says Anwar.<\/p>\n

It\u2019s dire straits until something gives:<\/strong> Sources say they plan to keep operating at reduced capacity, with extra safety measures, until December 2021 at least. They\u2019re monitoring covid cases, hoping to return to full capacity as soon as possible. Until then, they\u2019re bearing the extra costs and relying on parental support. \u201cI think parents would fight for us not to close,\u201d says Ragab. \u201cStill, we\u2019ve never been under pressure like this before \u2014 not even in 2011.\u201d<\/p>\n

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