By Bruce Chahwanda
CONFEDERATION of Zimbabwe Industries (CZI) says 122 firms indicated that losses are running into millions of dollars owing to COVID-19 induced challenges which have also seen industrial capacity utilisation getting a knock.
In a survey conducted by CZI for 30 May 2020, it shows that companies are facing a number of challenges with huge losses for this year.
“Out of 480, a total of 122 firms with total employment of 32 265 employees responded to the survey. Sixty-nine percent of the respondents are from the Harare Metropolitan Province, Bulawayo Metropolitan Province (6%), Manicaland (6%), Midlands (4%) and the remaining 15% distributed among the remaining six provinces of the country,” reads the survey report.
The survey also revealed that there is a trade-off between containment measures and economic development as the containment measures affect operations of the productive sector through supply chain disruptions, reduced demand, logistical bottlenecks, interruption and cessation of operations which results in reduced revenue and cash flow difficulties.
“The national lockdown has dictated high overheads operating environment for the productive sector. Closure of source and destination markets as many countries implemented varying degrees of lockdowns in response to the outbreak of the pandemic.
Disruptions at source markets damaging local operations since most industries rely on imported raw materials including agricultural raw materials where the country used to enjoy a competitive advantage,” said the report.
CZI noted that there is a need for a home-grown policy thrust as Covid19 has brought about ‘’a forced policy review date’’ for all economic sector policies in scope, scale and speed of implementation due to this unprecedented disruption.
“What is unaffordable is to allow a high cost of doing business environment to persist in the face of the pandemic. While the pandemic is out of anyone’s control, and external financial support is not forthcoming and local financing facilities are constrained, swiftly crafting a competitive and easy business regulatory environment is within reach and urgent,” said CZI.
CZI also noted that the productive sector is suffering the consequences of lockdowns as source and destination markets are closed leading to disruptions of supply chains.
“This will have negative effects on the county’s capacity to generate foreign currency revenue which is needed for critical imports. Due to the need to fulfil public health policy measures, some companies have ceased operations while others are partially operating leading to a high-cost environment emanating from high overheads. Collapsed demand for goods and services also implies loss of revenue for the business, in the process of destroying working capital. The economy has to face the reality that some companies have permanently lost some capacity while others may completely fail to resume operations,” reads the report.
By Bruce Chahwanda