Covid-19 drags down Cassava volumes
Senior Business Reporter
DIVERSIFIED digital services group, Cassava Smartech, saw its volumes during the lockdown period decline by 40 percent.
The coronavirus (Covid-19) pandemic, has disrupted businesses and economies across the globe, as governments moved to impose lockdowns to try and curb its spread.
Zimbabwe is currently under indefinite Level 2 lockdown period.
Certain sectors, digital and online services for example, were largely expected to thrive or at least maintain a stable performance during the pandemic phase.
However, Cassava says the lockdown, which was initially imposed on a 21-day basis on March 30, 2020 by Government, had a huge impact on their operations as their corporate clients were forced to shut down.
“The lockdown severely affected our business partners across all sectors of the industry with the majority having shut down during the initial lockdown period.
“The remaining businesses, which were classified as essential services, operated for reduced hours in compliance with the lockdown regulations,” said the group in a special trading update.
“This had an impact on our business, which is largely reliant on our partners, to the extent that the partners were closed. Our values were affected accordingly resulting in volumes decreasing by an average of 40 percent across the group during the lockdown period that subsequently recovered as the lockdown rules eased.”
After the initial 21-day-period and a two-week extension, Zimbabwe’s lockdown has since been extended indefinitely, although at Level 2, which has seen some businesses resuming operations.
The increased business activity could provide an opportunity for Cassava to regain its volumes, but perhaps not at optimum levels.
To this extent, the company says it has put in place measures to reduce operating costs as well as maintaining critical supplies.
“In response to the pressures which the Covid-19 pandemic has placed on the business, various cost cutting initiatives have been introduced in order to reduce the effects on profitability margins. We will continue to monitor our supply chain in light of the impact of the pandemic and formulate contingency sourcing plans accordingly.”
Going forward, the business is looking to take advantage of new opportunities provided by the pandemic to enhance its business offerings.
“Potential areas identified for growth include e-Commerce, e-Learning, On-Demand Services, Insurtech, Healthtech and Agritech as well as Fintech services.
“What is apparent across all business units is that the Covid-19 pandemic has ushered in a new normal and business agility is required to remain relevant and adapt to the changes as the opportunities present themselves. We are actively tracking changes in consumer behaviour during this time and proactively adjusting our plans and resources,” said the group.
The lockdown challenges aside, the first five months of the year have been a challenging one for the business, which recently lost a litigation against the Reserve Bank of Zimbabwe (RBZ) last month.
Cassava Smartech, through parent company Econet Wireless, had last month approached the courts to seek relief for the company’s mobile money agents whose flagged lines had been frozen by the central bank’s Financial Intelligence Unit (FIU) over illegal foreign currency trading.
But the High Court ruled the company had no legal standing to seek the relief on behalf of its customers. The court also ruled that the central bank acted lawfully in freezing the accounts.
Despite the challenges, the listed firm’s stock has been unaffected. Last week, the share price rose from 611, 42 cents at the beginning of the week to 752, 53 cents on Friday. A total of 1 878 200 Cassava Smartech shares traded last week, with an estimated value of $12,2 million.