Battered businesses see respite post Covid-19

September 24, 2020

…As Govt relaxes restrictions


Zimbabwe’s battered business sector is seeing a rainbow on the horizon after the government relaxed Covid-19 restriction on low new infections, breathing life into the local industry that has been grappling with low capacity utilisation and constrained demand.

The restrictions were imposed in March when the country registered its first Covid-19 positive case.

This resulted in a national lockdown in which business came to a standstill, save for the essential services sectors.

Global lockdowns affected the supply and local companies battled to secure raw materials as some stocks were stuck at borders while others struggled to export finished products.

Government is slowly opening up the economy with borders and airports are expected to reopen next month.

Confederation of Zimbabwe Industries president Henry Ruzvidzo said the relaxation of lockdown regulation was a welcome development for accelerated recovery of business activity but safety measures should be adhered to.

“The health authorities will have to remain vigilant to avoid re-tightening the lock down. Businesses are also encouraged to continue to observe strict measures at workplaces as per WHO guidelines,” Ruzvidzo said.

Employers’ Confederation of Zimbabwe president Israel Murefu said the relaxation of restrictions bode well for business as it allows for more productive time in terms of working hours.

“This improvement should be the harbinger of better conditions we expect to prevail for business so that capacity utilisation increases and more workers return to work.

Restoring productivity to the pre pandemic levels will be good for the economy in terms of jobs and economic activity,” Murefu said.

“We look forward to more improvements in working arrangements but with stringent observations of health and safety measures to prevent the pandemic from escalating.”

In its financial results for the half year ended June 30, resources group RioZim said expansion projects had been put on hold due to Covid-19 restrictions.

RioZim said its Biological Oxidation (BIOX) project was brought to a halt due to Covid-19 restrictions as all of the equipment manufacturers in South Africa and local contractors stopped operations in compliance with lockdown regulations.

The BIOX plant will help in the processing of pure oxide ores to make good grades and high recoveries.

“Funding initiatives that were being pursued by the group were dampened as financiers took a conservative approach in the face of low visibility and an uncertain future because of the pandemic,” board chairman Saleem Beebeejaun said in a statement accompanying the group’s financial results for the half year ended June 30.

Exporters see the reopening of borders as a boon for their businesses Proplastics MD Kudakwashe Chigiya said the impending reopening of the borders comes as a huge relief and a welcome development for many businesses adding the landscape and business environment has completely changed and survival in this new normal requires those with the ability to respond and adjust with agility and ingenuity.

Chigiya said the reopening of borders gives Proplastics access to markets.

He said the operating environment had been virtualised in the past seven months making it difficult for many companies to enjoy normal trading.

“The opening of these borders presents huge opportunities for us as we can now physically reconnect with existing and prospective customers,” he said.

Chigiya is optimistic that a number of projects will resume and spur demand. He said demand for Proplastics’ product offering was heavily affected, save for Covid-19 response products.

Businesses say the reopening of the economy and borders would result in improved cashflows.

The normal business cycle where a company buys raw materials, value add, sell and get paid was negatively affected.

“It is our anticipation that the reopening of borders will allow and facilitate the free movement of goods from one country to the other and Proplastics will capitalise on this,” Chigiya said.

There are fears that some companies may not be able to reopen according to Clement Mukwasi, Employers Association for Tours and Safari Operators founding president.

“It is not very clear as to what is going to happen at the time of opening as some companies may not be able to come back to business.

They were seriously impacted by the scourge,” Mukwasi told Business Times.

“We however hope that the opening of the industry, travel and the opening of the tourism industry is going to be stimuli to the beginning of a new normal.”

He said operators have to create new packages that are “sensitive to the income levels of the domestic tourists” adding that all parastatals and public sectors that offer services to tourism companies should consider either completely remove dues that were supposed to be paid during the lockdown period or at least extend some grace for the companies to be able to pay afterwards when the situation becomes normal.

Mukwasi said the sector will move a step in the right direction when regional tourism is opened, “we are going to be moving a step in the right direction”.

However, the combination of domestic tourism and the regional tourism contributes about 10% of the sector’s usual business, he said.

The sector is looking to the international travel market to return to yester-year’s highs.

“We are hopeful that when the international travel market opens, we will slowly rise up and slowly go back to the heydays,” Mukwasi said.

Hospitality group African Sun Limited said it has put effort in the short term on the domestic market following the removal of restrictions on inter-provincial travel starting September 16.

The group said it has adopted “quick adaptation strategies” to bolster local travel. “These initiatives will be augmented by the government’s short-term reliefs or incentives for local tourism, for example the suspension of VAT on all domestic accommodation,” the hospitality group said.

Domestic business largely driven by government and non-governmental organisations programmes centred on Covid-19 health responses and hunger alleviation is expected to be key to the group’s recovery strategy.

To this end the group anticipates improved occupancies for the hotels that opened in phase 1 and 2.”

The group said the average daily rate was expected to ease from prior years as it promotes the domestic market.

International flights are expected to resume from October 1 and African Sun anticipates a gradual build-up period of regional and international business during Q4 of 2020, with the business expecting to start benefiting from the increased travel beginning of Q1 2021.

“We expect to see improvements in volumes in Q2 2021 and to return to normalcy by Q3 2021,” it said.

For Proplastics, the company intends to go back to competitiveness riding on the back of reasonable lead time.

Delivery lead times had been curtailed by restrictions rendering many businesses uncompetitive.

Chigiya said the pandemic had created bottlenecks in the processing of export documents and is hopeful that Proplastics would take advantage of the anticipated improvements at the revenue authorities and process documents within reasonable and competitive timeframes as businesses resume normal operations.

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