Zim companies will seek to retain earnings for enhanced operational efficiency

By Zbc Reporter
The COVID-19 pandemic will see most Zimbabwean companies deviating from the traditional practice of paying out dividends as they will seek to retain earnings for operational activities.
Traditionally, April is a payback time for investors in Zimbabwe as it is the time of the year they receive dividends and other investment related income.
However, that script has certainly been changed by COVID-19, which has brought a lot of business uncertainty going into the future, hence companies will adopt survival strategies to safeguard their working capital by way of not paying dividends.
An economic analyst, Mr Titus Mukove said the strategy will not be peculiar to Zimbabwean companies only but will be a worldwide phenomenon that will dominate business, post the pandemic period.
‘Companies will be forced not to dividends as they will opt to keep this year’s earnings amid future uncertainties due to Covid-19,’ says Titus Mukove Economic analyst.
Persistence Gwanyanya concurred with his counterpart, saying due to negative effects of COVID-19 on business, the least costly and highly efficient business strategy to survive as a going concern is to postpone dividends payout and commit such funds into working capital.
‘Zimbabwean companies will likely bear the most brunt of Covid-19 as they have limited access to finance and for them to cushion themselves from this reality hence it is prudent for them to invest their future by not paying any dividends as part of their preparation for the future, says Economist Persistence Gwanyanya.
As the world fights the spread of COVID-19, one area of concern is on the viability of businesses and economies during and after the pandemic.