By Calvin Manika
IN the past three years, the business community was hit hard by COVID 19 especially in 2020 and 2021. Internationally COVID 19 is receding as witnessed by the decrease in new infections and low number of deaths. Health experts continue urging people and institutions including the business community to comply with the World Health Organisation (WHO) protocols as the disease is not yet over.
During the crisis, the business community relied on the support from the government. The support included the measures which were favourable for the operations of business in a safe environment and stimulus packages to cushion some Small and Medium Enterprises (SMEs).
Even after the full resumption of business operations, the business community think that government support is still vital for their operations and to stabilise especially after years of losses and economic shocks.
Speaking to The Entrepreneurial magazine, a businessman who runs a wholesale and hardware shops in Harare, Tafadzwa Muone said, at the height of the pandemic, owners of the properties continued demanding rentals and other bills despite not operating or low business uptake.
“Right now, we want to be supported in tax exemptions on some of the goods we import. The government must also be seen creating favourable markets for locals. But, most importantly we must have access to forex at the auction system to ease our burden. We were hit hard by the COVID 19 pandemic,” said Muone.
On 28 March 2020, the Zimbabwean government announced a national lockdown to be implemented within 48 hours. Initially, all nonessential businesses had to close and all citizens had to remain in their homes for 21 days. Since then, many businesses have struggled to stand the economic conditions. This is coupled by poverty among the consumers.
According to the World Bank’s economic analysis for Zimbabwe, the number of extremely poor citizens rose to 7.9 million in 2020 due to the COVID-19 (coronavirus) pandemic and its impacts. The Zimbabwe Economic Update, Overcoming Economic Challenges, Natural Disasters, and the Pandemic: Social and Economic Impacts, cites surveys show nearly 500,000 Zimbabwean households have at least one member who lost her or his job in 2020 and 2021, causing many households to fall into poverty, and worsening the plight of the existing poor. Most of these family members have been not reinstated of their jobs to this date.
A report titled Contemporary Issues in African Trade and Trade Finance released by IMF in December 2021 states that, the COVID-19 pandemic unleashed an unprecedented health and economic shock on the African continent.
“The region was acutely affected by several coinciding blows: a domestic health crisis, negative external spill overs, and a sudden decline in commodity prices. Swift introduction of containment and mitigation measures at the onset of the pandemic, while vital to saving lives, also caused significant production and supply chain disruptions and sharp declines in economic activity, and heightened food insecurity,” notes the report.
Spending needs increased, with countries including Zimbabwe looking to mitigate adverse effects of the crisis, while revenues fell due to lower growth and trade, and together these effects raised debt levels.
The report says, negative spill overs from the global fallout reduced external demand, while availability of imports weakened customs revenues and increased inflationary pressures. The pandemic’s fallout also led to the sharp tightening of global financial conditions in the first half of 2020 – with sovereign spreads in the region
A large proportion of Zimbabwe’s most marginalized workers were employed in some on the country’s hardest-hit sectors. In addition, COVID-19-related disruptions to local and imported food supplies and depreciation pressures pushed up food prices, with a dramatic worsening in food insecurity in some areas.
The government responded to the COVID-19 crisis by dispensing financial and liquidity support, policy advice, capacity development, and debt relief. But, the business community said most of the business people did not benefit from the government facilities.
“We needed support in debt relief, which we did not get. Now, we are faced with many challenges and the government can still consult with us and we can table the pressing issues caused by the COVId-19 pandemic,” said Arnold Murefu, a local entrepreneur.
At the continental level Zimbabwe benefited from the support through IMF financial assistance, while helping to catalyse additional donor support. Since March 2020, the IMF has approved nearly US$36.5 billion in COVID-19-related financial assistance to 44 African countries via Rapid Credit Facilities, Rapid Financing Instruments, and new and existing programs – including augmentations of access.
To support liquidity-constrained countries in addressing the impact of the pandemic, the IMF Board of Directors approved the 2021 general allocation of SDRs in August 2021.
“This was the largest SDR allocation in the history of the IMF, equivalent to US$650 billion (about SDR 456 billion), of which nearly US$34 billion was allocated to African members. Newly allocated SDRs can help member countries bolster reserves and reduce their reliance on more expensive domestic or external debt, while providing resources to invest in post-pandemic recovery. Since SDRs are distributed to the IMF members in proportion to their IMF quotas,” notes the IMF report.