PHILLIMON MHLANGA
Zimbabwe companies are reeling from severe reduction in sales volumes with some facing closure due to the impact of the devastating Covid-19 pandemic induced lockdown and shrinking disposable income amid a deepening economic recession, Business Times can report.
The government had projected a 7.4% economic growth this year.
There is now a highly likelihood of a deep recession due to Covid-19 pandemic.
This week, President Emmerson Mnangagwa, extended the lock down by two more weeks. Zimbabwe has reported more than 35 000 cumulative cases since March last year, 30 000 recoveries and 1 400 deaths.
Businesses are now allowed to operate from 8am to 5pm.
Those seeking to resume operations, Mnangagwa said, are required to test their employees in compliance with the World Health Organisation protocols.
Figures availed by companies that published their trading updates and financial results in the past few weeks show that the demand curve shifted to the left in most companies in 2020 meaning less of the goods and services were being demanded largely due to the impact of Covid-19 and the shrinking disposable income to the market, which continue to ravage companies.
In its 2020 financial results published last week, the country’s biggest packaging manufacturer, Nampak Zimbabwe Limited said overall demand for packaging remained subdued compared to previous years.
MD John van Gend said Nampak had not been immune to the social and economic impact of the COVID 19 pandemic and the resulting effects on the Zimbabwe economy over the past year.
“Volumes for the full year at Hunyani Corrugated division declined by 28% compared to the prior year. There was also a decline in regional exports. At Mega Pak, the full year volumes declined by 12% against the prior year, mainly due to constrained consumer demand in the preforms market in the first half of the year.
However, local demand increased in the final quarter of the year. Regional export demand was depressed, especially in the Democratic Republic of Congo,” van Gend said.
He added that volumes at Carnaud Metal box also declined by 34% compared to the prior year. The shortage of foreign exchange and reduced disposable incomes in the first half of the year negatively impacted demand.
Itai Pasi, the CFI Holdings chairperson, said the company suffered a severe shrink in demand and profit due to the impact of COVID-19 lockdown restrictions which disrupted the supply chain, capping a turbulent 2020.
“The trading environment was marked by operational and economic challenges,” Pasi said.
She added that the situation was exacerbated by drought induced shortages of cereals used in the stockfeeds manufacturing processes.
It was also a turbulent year for the property market with Mashonaland Holdings MD Gibson Mapfidza saying the property market fundamentals have remained depressed due to the difficult macro-economic climate and low business confidence.
“The occupier sub-market was affected by low demand for office space; this in turn had an impact on development activity. The economic outlook for the rest of the financial year into 2021 remains uncertain due to the persisting economic conditions which have been exacerbated by the second wave of the Covid-19 pandemic,” Mapfidza said.
“The Company will continue to preserve value by pursuing its property development projects in line with the broader company strategy while continuing with efforts to retain existing tenants and secure new leases to sustain overall business performance.”
There was, however, some improved demand in the last quarter of the year.
