adminElias Pacheso
In my over 20 years as an economist I am yet to face so many unprecedented challenges all at once. It is easy to lose hope or just watch and wait for the unknown, yet we must all find the best ways out of these challenges. Yes, things are quite bad and they will probably be for sometime to come. We are all not sure what will happen or whether we will ever come out of this in one piece and have life return back to normal. Life is full of such situations but none have been this grave at least not in our lifetime.
The lockdowns have caused a lot of anxiety amongst both employers and employees. It was indeed a decision that had to be made because it’s clearly a matter of life and death, if we look at how the disease is affecting health systems across the globe. Not being an easily understood disease Covid-19 has left many countries with no choice but to lock down their countries to avoid losing control.
Every country in the world is faced with similar situations if not worse and everyone is dealing with their situation in every way they can. It is clear that Covid-19 has ushered in a new way of living. In situations like these it is important to adjust and be proactive. While it’s not something that any business had planned for, the lockdown has led many executives in big companies to quickly come up with ways of limiting the costs of the lockdown during and after.
Worldwide economists have flagged out a number of risks and called on business to prepare for a major economic slowdown, and even plan for a new way of running their businesses. While numbers are difficult to find at this time, any economic slowdown is accompanied by massive job losses and rising social spending on vulnerable groups. Zimbabwe is no exception and is faced with the same situation and will need to work on ways of reducing the impact of the recession.
What worries me the most as an economist is the fact that the informal sector which makes up much of the economic activities in the economy will be hardest hit. Many men and women have put everything they have in their businesses and will most likely lose much of it when the crisis is over.
This means that there will be bigger problems to deal with aside from high unemployment which are already worrying the Government. It is therefore encouraging to see that various initiatives have already begun to assess the impact of Covid-19 on Small to Medium Enterprises. Armed with the knowledge from these studies it will be important for Government to implement programmes to restore the lost hope and restore the
This exercise, however, must not stop there, it must also go as far as identifying start-ups, because these are also affected and usually less visible despite their importance in introducing new business models and innovations. A vibrant start-up ecosystem was shaping up in Zimbabwe prior to the Covid-19 crisis. Supported by privately run innovation hubs and spaces, these start-ups were growing and beginning to gain traction.
When one looks at the problems facing the country it’s obvious that to get over the economic decline caused by the Covid-19, the Government must start to do its homework now on how it will shore up confidence in the economy and reset it on to a growth path. A sectoral approach will be needed in dealing with the effects of Covid-19.
Tourism is the hardest hit, because of travel restrictions which have been imposed on countries, not to mention reduced disposable incomes across the globe. The April, May period is usually quite active but this year will be a different story as a result of the lockdown. Most holidays are planned well in advance and have already been cancelled. Fixed costs such as labour costs in the sector are probably one of the largest costs.
Jobs may be lost and therefore tax incentives may be necessary in this sector to help protect jobs.
Post Covid-19 the financial services sector will never be the same again as financial institutions are likely to face increased defaults on loans as borrowing clients are under distress. That inflation is high and was wreaking havoc on margins is a no brainer. This will further complicate interventions on the part of government to encourage lending to distressed businesses. I foresee a number of layoffs in the sector as banks review their branch networks. This may very well mean that the retail corporate banking operations will be scaled back across many banks in the country. More and more transactions will be done on line and a new emphasis will be placed on cybersecurity and building more robust and user friendly systems.
More than ever Covid-19 has led to a relook at the manufacturing sector and the need for the country to increase its capacity to produce its own products locally. Images of university students working on a ventilator prototype have shown me that necessity is the mother of invention. If any lesson is to be learnt from this it is that if we are forced by circumstances to innovate we will and we can. I hope that coming from this crisis, local companies will seriously look at their operations and seriously invest in start-ups, Research and Development. New business models and innovations will be needed. Reports that previously shut hospitals were being revived and the CAPs medicine plant were being revived shows that with the right focus we can rebuild businesses that matter in our economy. While Covid-19 will go, as a country it’s clear that Zimbabwe needs to re-look at the health sector as a whole and prioritise it. As I said last week there is no economy without a healthy nation.
When it comes to the country’s export sector, the mining sector is hardest hit due to the fact that major markets are in turmoil. Cotton and Tobacco will also be disrupted and of particular concern will be the tobacco sector due to the fact Covid-19 is said to be affecting smokers more than non smokers due to its impact on lungs. Long term consumption of tobacco is under threat.
When all is said and done the country will need to find ways of restarting exports once logistics are back in place to handle the country’s exports. A plus from all this, however, is the fact that Zimbabwe has the ability to ramp up horticulture and in the long term citrus fruit and fruit juice exports. Post Covid-19, the demand for nutritious foods and fruits is likely to increase and Zimbabwe should gear up to take advantage of this.
While at the start of this article, I was so worried and not sure whether we will come out of this strong, I am more convinced now that we will come out strong and more focussed as a country post Covid19. As highlighted we will have more efficient systems in Banks, more diversified exports and better health infrastructure. Business models will change for a number of companies and sectors as a whole. Until then continue to work on your own strategy from home and help stop the spread. We will come out of this one together and rebuild our nation together.
Online Reporter