eBusiness Weekly
Business Writer
Governments should consider tax bailouts and exempting SMMEs from loan repayments for six months to enable business recovery, the SADC Business Council has said in the wake of the Covid-19 pandemic that has ravaged economies across the region.
Regional countries are expected to suffer serious economic downturn with the International Monetary Fund (IMF)’s Word Economic Outlook, April 2020 report projecting that the Zimbabwean economy will contract by 7,4 percent in 2020, while that of regional powerhouse South Africa is expected to weaken by 5,8 percent.
Economies in the SADC region have been under varied stages of lockdown that has affected economic activity threatening the existence of some businesses that were forced to close shop for at least 21 days.
The hardest hit businesses are in the tourism sector where the impact has been severe as countries adopted social distancing and lockdown as a way of combating the spread of Covid-19.
Travel across the globe has also been restricted as airlines suspended flights in line with stringent measures taken by governments — Zimbabwe included — to restrict visits from foreign nationals.
The result has been devastating for some companies with Zimbabwe Stock Exchange entity, African Sun, telling its workers that it is only in a position to pay employees 50 percent salary for the months of April and May 2020.
“In the following months, the salary will accrue at 50 percent and will stand to be paid when the company recovers from the current trading and financial affliction. The balance and accrued salaries will be paid as and when the current ‘act of God’ has been contained and business has normalised,” reads an internal memorandum seen by Business Weekly.
Landlord, Dawn Properties, is also going to record a serious dent on its revenue in line with tenant African Sun.
Another ZSE-listed entity, Simbisa Brands, has since announced that it is laying off contract workers, putting employees on leave and freezing acting appointments, among other cost-cutting measures.
The quick services restaurant firm said it had not generated enough revenue to pay salaries as it was operating below normal hours.
Zimbabwe’s economy was already slowing when the coronavirus pandemic hit, weakening chances of economic revival.
The SADC Business Council suggests governments should consider putting together stimulus packages to aid business revival post the Covid-19 crisis.
As of Thursday, the Zimbabwe Government had not announced any bailout package for businesses although Women’s Affairs, Commmunity, Small and Medium Enterprises Development Minister Sithembiso Nyoni reportedly said Government was working on a cushioning package for small-to-medium enterprises to mitigate the impact of the 21-day national lockdown the country adopted to combat the spread of Covid-19.
A communique by the SADC Business Council also suggests that central banks in the region lower interest rates to encourage lending and quick recovery of business.
The Reserve Bank of Zimbabwe (RBZ) has already done this lowering its bank policy rate to 25 percent from the previous 35 percent.
Other measures recommended by the SADC Business Council were for member countries to utilise rail as a preferred transport solution to minimise human contact and quarantine dwell time during the movement of regional cargo. The body has also suggested member countries to facilitate easy visa clearance for truck drivers moving essential cargo across the region.
“Stringent measures taken by a corridor country should be informed in advance to neighbouring or corridor countries for contingency and pre-alert measures to be provided to service providers (freight forwarders and transporters).”
Already there have been reports that trucks are facing challenges at the borders, with queues stretching for several kilometres. In Zambia all drivers are being quarantined including those without Covid-19 symptoms.
According to a complaint posted on tradebarriers.org, which was created for member countries to lodge complaints, this was not in line with SADC guidelines that stipulated that member states would undertake initial screening and only quarantine those that show symptoms of Covid-19.
