Zimbabwe companies can’t afford lockdown extension


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The Confederation of Zimbabwe Industries (CZI) says 82% of local companies can only pay salaries for a month under the lockdown, urging the government to lift the restrictions to allow companies to resume limited operations.

The lockdown was necessary, but its implementation should consider the state of the economy and the government’s capacity to bailout companies, CZI said in a report made available today.

“The implementation of the lockdown should take into consideration the underlying conditions in the economy and the limited fiscal leg-room to rescue industry. Looking at the scenarios in Europe, it shows that they have allowed production including that of non-essential goods to continue except in Italy and Spain,” CZI said.

“Considering the above and the importance of making sure we are able to resume consumption of our goods in the local and regional markets, it would be prudent to reconsider the lockdown measures with the direction of the Ministry of Health and Child Care. It is of paramount importance that exporting companies are able to continue exports.”

In an effort to stop the spread of coronavirus, the government has imposed a 21-day lockdown that has affected much of industry and commerce, despite broad exemptions. A review of whether or not to extend the lockdown will be made at the end of the period, President Emmerson Mnangagwa has said.

According to the CZI survey, companies will not be able to pay wages beyond a month.

“Our businesses and our government both have no capacity to sustain the costs of a total lockdown. Preliminary analysis of data collected from businesses across all sectors of the economy on the impact of the lockdown indicate that companies are not able to sustain the payment of wages and salaries for longer periods without production taking place. Eighty two percent of the respondents indicated that they can only sustain payment of wages and salaries for one month under lockdown.”

Companies should be allowed to resume work, while observing precautions such as social distancing, hygiene and screening of staff, CZI says.

CZI has made the following recommendations on how to deal with the economic fallout. Most of the CZI’s recommended steps would require significant tax concessions by the government.

Government should drop all “hugely wasteful” subsidies, including those on fuel prices. The exchange should also be allowed to float freely, so that it converges with the black market rate.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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