COVID-19 is having a devastating impact on Zimbabwe’s already shattered economy but there is no doubt that the carnage will get much worse if nothing is done to rescue the few remaining companies.
As we report elsewhere in these pages today, key sectors of the economy are feeling the heat, with tourism players reporting hotel room occupancy rates as low as 20%.
Tourism was always going to bear the brunt of the coronavirus pandemic, considering that China — where this disease is believed to have originated — was increasingly becoming an important source market for tourists into Victoria Falls, the crown jewel of Zimbabwe’s hospitality sector.
The closure of Zimbabwe’s border with South Africa at Beitbridge will add fuel to the fire. The continent’s southernmost country is by far our biggest trading partner. Although both governments have emphasised that freight will not be embargoed, it would be naive to expect the supply chain of goods not to be disrupted by South Africa’s 21-day lockdown. Import-dependent Zimbabwe must brace for shortages and, naturally, a spike in prices as the principle of supply-and-demand kicks in.
What Zimbabwe needs is a comprehensive stimulus package to provide the much-needed economic oxygen to companies that face the real danger of suffocation.
It is difficult, of course, to realistically expect a government that has not found it necessary to buy and install a ventilator at the country’s only covid-19 hospital to now come up with a meaningful stimulus package. All the same, an emergency package is needed to counter the effects of covid-19.
On the financial front, the authorities must support banks in deferring the repayment of loans and mortgages. Distressed firms will require liquidity support, to preserve jobs and prevent debt from decimating the corporate sector. Exporters will need special assistance.
Hospitals urgently need financial aid.
Citizens need social safety nets. This could come in the form of direct stipends channelled via mobile money platforms.
In view of Zimbabwe’s economy is highly informalised, the government must find creative ways of supporting informal businesses. This may be in the form of tax breaks—perhaps the suspension of the infamous 2% electronic transaction tax would be a good start.
Assistance to the small and medium enterprise sector could also come in the form of grants. We all know how difficult it is in this country for any fledgling business to pay off cumbersome loans in a very turbulent economic environment.
Local councils are in desperate need of help. Their hospitals and clinics are derelict. Piped water supplies are almost non-existent in many areas. Rubbish is not being collected. Standards of hygiene have hit rock bottom, posing a danger in the middle of the Covid-19 pandemic.
Financial resources are also needed to enable people to receive coronavirus testing and treatment free of charge.
Right now, it is extremely difficult for those exposed to the disease to undergo testing.
The big question is: Where will the money for all this come from? Everyone must make it their business to find answers to that vital question.