Sundaymail Editor
Golden Sibanda
Local firms have found a way to survive the fallout from the coronavirus, and captains of industry have capitalised on strong aggregate demand across sectors to grow volumes and operations, according to Lafarge Cement Zimbabwe chief executive officer Mrs Precious Nyika.
Mrs Nyika, who leads one of the largest cement manufacturing companies in Zimbabwe, conceded that despite the lingering negative impact of Covid-19, industry is registering growth across all sub-sectors.
She was speaking on Wednesday during a mid-term budget and economic performance review panel discussion organised by Business Weekly and Zimpapers Television Network (ZTN) in conjunction with the Confederation of Zimbabwe Industries (CZI).
Speaking during the same event, Finance and Economic Development Minister Professor Mthuli Ncube said the Government remained confident that growth this year would remain strong, riding on the low base effect, especially after two consecutive years of recession.
Zimbabwe has had to resort to lockdowns since March last year to contain rising infections. Restrictions have ranged from reduced business hours, suspension of high-risk activities, restrictions on gatherings, movement, intercity travel and trading, among others.
According to CZI’s business intelligence survey, average industrial capacity grew to 46 percent in the first three months of the year.
Capacity is expected to rise to 61 percent by year-end.
Mrs Nyika said Lafarge’s cement business registered a 20 percent growth in volumes, which saw the firm reach full plant capacity owing to improved power supplies.
Volumes were mainly driven by heightened activity in the construction sector following the Government’s decision to invest 33 percent of the budget in infrastructure.
A construction boom cutting across roads, dams, bridges, schools, health institutions and other Government facilities is expected to significantly drive projected growth of 7,8 percent this year.
“What we saw in the first half of the year 2021, of course we saw the third wave of the pandemic, we saw significant lockdowns in January and February. From a business perspective, that meant restricted working hours, restricted travel, restricted movement of goods and services.
“And that could have led to suppressed demand, but the surprising fact is that quarter one and quarter two, demand has actually been stronger in 2021 than what it was in 2020. What does that tell us?
“It tells us that business has found a way to adjust to Covid-19 lockdowns and has found a way to survive through those lockdowns and still be able to sustain,” she said.
The first half of 2020, Mrs Nyika added, was affected by lockdowns, which caught many people and corporates unaware.
“We celebrate the vaccination that has happened in the first half as business. I think you see businesses across the country taking a stance on their vaccination approach, and helping to support the drive for people to be vaccinated.”
The rapidly progressing vaccination programme will allow firms to regain a modicum of normalcy once herd immunity has been reached.
Mrs Nyika said falling inflation, which touched a two-year low to 50,37 percent in July from 106,6 percent in June, will hold down prices and make it easier for business to plan.
A stellar agricultural season, which saw record output for maize, had improved disposable incomes and strengthened aggregate demand.
Improved power supply and fuel availability, especially for most of this year, said Mrs Nyika, has assisted businesses to increase capacity utilisation.
It is believed that the strong performance on the Zimbabwe Stock Exchange (ZSE), which has seen the market capitalisation rise to the current $800 billion from $228 billion in August 2020, though partly reflecting the effect of inflation, had demonstrated confidence in local firms.
However, the Lafarge CEO noted that challenges of limited availability of foreign currency on the auction system had negatively impacted the ability of business to reorder, recapitalise and run operations smoothly.
Disparities between the official exchange rate ($85/US$1) and the open market rate ($145/US$) are proving to be disruptive for business.
Trying to manage the coronavirus at the workplace through testing employees, procuring protective equipment and requiring staff to work from home has created additional costs for companies.
The pandemic has reportedly made it increasingly difficult for business to create new jobs, as only 13 percent of the CZI survey respondents had been able to do so.
However, 80 percent did not shed any jobs.
Mrs Nyika said:
“If you look at all of the indicators that I have mentioned, they are pointing towards growth, and then there are some challenges there. But when we talk about business growth, we do not talk about growth without challenges.
“We expect to rise from the challenges we have next season, and challenges from the past season were power, forex access, inflation, a stock exchange that was not functional, a bad agricultural season, Covid-19 crisis with no end in sight, all of that.”
Businesses are being encouraged to continue to be dynamic and evolve with time to be able to adapt to new challenges.
In his opening remarks during the panel discussion, CZI president Mr Henry Ruzvidzo said the input they made into the national budget and midterm review had been considered.
The macro-economic stability achieved so far, he said, has helped business to plan and reinvest.
“Protecting the stability is important for the growth of the economy and indications from the second half of last year and first half of this year, from the surveys that we have done, would indicate that industry is on the rebound; capacity utilisation has actually been improving.”
Mr Ruzvidzo said average capacity utilisation was projected to continue improving in spite of challenges posed by Covid-19-related restrictions.
Some concerns have, however, been raised by business with respect to the auction system, which has been a game-changer for industry.
More work still needs to be done to make the auction more efficient and generally accepted by both generators and users of foreign currency, he said. — businessweekly.co.zw
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