Covid-19 impact underestimated: CZI

WITH most countries so far failing to flatten the curve of the Covid-19 pandemic, Zimbabwe's industry players say the impact on business could be more devastating than previously estimated.

Local manufacturers that were already struggling with low local demand for their now face perhaps an even bigger problem — a halt in production for a yet undetermined period of time due to cases of Covid-19 being recorded at business premises, forcing company shutdowns.

Earlier in May, Zimbabwe moved to a level 2 lockdown, which meant that industry and commerce could resume.

But a recent spike in cases have forced Government to tighten restrictions; and although businesses have been allowed to remain open, the companies themselves have been shutting shop.

The virus, which continues to spread, has so far infected over 15,3 million people globally, with over 630 000 deaths recorded as at July 22, 2020.

Zimbabwe had recorded over 1 800 cases and 26 deaths over the same period.

Confederation of Zimbabwe Industries (CZI) president Henry Ruzvidzo said the pandemic could have worse ramifications than projected.

“With respect to the Covid-19 crisis, I think developments on the recent past would indicate that we may have a bigger problem than we are indicating in our numbers even in the mid-term revised budget.

“Our biggest fear as industry is that we see operations forced to stop because of Covid-19 cases within our business operations,” he said.

“The costs that we are assigning to efforts in dealing with Covid-19 may not be as indicated and we need to look at it with more realism.”

Several companies including starafrica corporation, Econet, NMB, CIMAS, Pick n Pay and PSMAS have closed some or all their branches to deal with reported cases.

For local firms the Covid-19 pandemic is an additional weight as they have already been trying to contend with weakening consumer demand, attributable to inflationary pressures, a depreciating Zimbabwe dollar and low disposable incomes.

Earlier in the year, Government announced an $18 billion stimulus package, which will continue to guide Zimbabwe's Covid-19 response as Treasury avoided a supplementary budget.

Fiscal authorities, however, remain cautiously optimistic of economic recovery going forward.

“A combination of Government intervention and external development support in mitigation of the Covid-19 pandemic is expected to alleviate deeper contraction of the economy to a projected -4, 5 percent in 2020, against the initial Budget projection of 3 percent growth,”said Finance and Economic Development Minister Mthuli Ncube while presenting the Mid-term Fiscal Policy Review last week.

“In the absence of the above stimulus package and assuming prolonged and severe impact of the crisis, the economy would contract severely.

“Beyond 2020, and in line with the upcoming National Development Strategy framework, the economy is, however, anticipated to recover to record GDP growth of about 7, 4 percent in 2021 before moderating to around 5 percent thereafter.”