eBusiness Weekly
Own Correspondent
Without getting into the issues leading up to the lockdown, its implications and the current challenges around the work-from-home models, we want to discuss what measures Government needs to put in place post the lockdown to ensure businesses resume and are supported to deal with the new economic realities that are emerging around the world.
It is important to start by analysing the big changes we are observing from around the world that will impact our economy. These are monumental shifts that are taking place around us that are likely to reshape world economies in major ways in the short, medium and long term.
Consumer spending patterns — Consumers are shifting towards more conservative spending patterns that will mean greater levels of savings, (in forex in our case) and less spending on discretionary items. This is likely to be a long term trend as people come to terms with the psychological effects of the very abrupt interruption to their economic wellbeing and the loss of life and productivity that is occurring.
Working patterns – In Zimbabwe, we have a significant divide in our work routines, with those formally employed usually required to be physically stationed in their offices, unless you are a trades person like a technician. The other side is the informal sector who have devised varied models and work routines. All these have been disrupted and new trends will emerge.
Border control — As countries grapple with the Covid-19 pandemic, they have closed their borders as a measure to reduce imported cases spreading into their territories and burdening their health systems. A consequence of this has been the virtual shutdown of some trade routes and this trend will likely continue for some time.
Taking the above into account we believe government should consider measures that acknowledge the size of the informal sector and its contributions to livelihoods and the economy and the extra-ordinary obstacles faced by the formal sector in resuming full operations amid the challenges highlighted above. There is no doubt that we as a country will not be going back to work as usual after the lock down and there is a real need for the main stakeholders, government, labour, business and society to start formal, constructive and decisive engagements on how the country should restructure itself to be better prepared to face the next shock event.
We suggest that government consider the following to help companies to remain viable in the short term.
Tax incentives should be given to both businesses and individuals through tax holidays, downward revision of tax rates and expansion of PAYE tax bands. This will give some liquidity back to the economy to encourage and sustain commerce.
Administrative fees, levies and charges need to be reviewed downwards for a period of time to give back liquidity to the market. Such things as tollgate charges, licensing fees, local authority rates, etc, impose very heavy burdens on small businesses and individuals.
Financing costs including bank charges need to be reviewed to encourage businesses and individuals who are in distress to borrow from the formal markets which offer protection and safeguards from predatory lending.
