How coronavirus has hurt Zimbabwe’s ailing economy

BY TAFADZWA MHLANGA/TATIRA ZWINOIRA

PRESIDENT Emmerson Mnangagwa finally declared the coronavirus (COVID-19) a national disaster on Tuesday.

On Monday, a day before Mnangagwa’s declaration, the Health ministry revealed that a United Kingdom citizen, who had visited Victoria Falls between March 7 and 10, tested positive for the virus upon return to her country.

As a result, officials from the Health and Child Care ministry working with State security agents, are frantically searching for individuals who may have met the UK traveller during her stay.

This news sent shockwaves across the country as Zimbabwe is currently in the throes of a recession with COVID-19 threatening to worsen the deepening economic crisis.

Strangely, around the same time last year, it was the deadly category three storm, Cyclone Idai, that severely added to the country’s economic woes.

Tourism
According to the Zimbabwe Tourism Authority’s travel statistics, the United States, Britain and Ireland, Germany, Japan, France, Benelux countries (Belgium, the Netherlands, and Luxembourg) and China/Hong Kong are Zimbabwe’s biggest markets outside Africa.

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According to the authority’s 2018 report, the statistics translated to an average of 260 daily visitors from the United States, 197 (Britain and Ireland), 109 (Germany), 88 (Japan), 72 (France), 57 (Benelux), and 53 (China and Hong Kong).

In Africa, the top markets are South Africa, Mozambique, Zambia, Botswana and Malawi with daily average visitors of 1 228, 529, 453, 254 and 229, respectively.

As such, the effect of the coronavirus is set to negatively affect tourism as these countries account for half of Zimbabwe’s tourism receipts that have been averaging US$1 billion yearly.

Tourism Business Council of Zimbabwe president, Winnie Muchanyuka told the local media that the council and its member associations like the Hospitality Association of Zimbabwe and the Board of Airline representatives were compiling statistics on the effects of COVID-19 on
tourism.

“The quantum is a moving target as everyday industry is faced with new restrictions or heightened travel bans,” she said. “I think that the travel restrictions imposed by South Africa in the last few days will escalate the cancellations to the country and will no longer be just leisure tourism, but will include business travel seeing that Johannesburg’s OR Tambo International Airport is the hub for southern Africa and most intercontinental and regional connections are made through this airport.”

Imports
Another effect of the coronavirus is on imports as the country is largely a consumptive economy.

According to the 2019 Confederation of Zimbabwe Industries (CZI) manufacturing sector report, Zimbabwe’s top markets for raw materials are South Africa which accounts for 36%, China (21%), India (9%), United Kingdom (6%), South Korea (4%), Germany (3%) and Zambia (2%).

Since these countries have issued lockdowns, making it hard for local firms which rely on raw material imports to buy from them, the manufacturing of goods for the local market is being constrained.

In general, these raw material source markets have seen governments in those countries quarantining certain sections of the country, advising against going to work and imposing strict measures on border entry or exit points.

For example, in South Africa, gatherings of more than 100 people have been prohibited while the population was advised to minimise contact with others. And, in China, large sections of that country have been quarantined.

“The shops that sell imported goods especially from China have been greatly affected considering the lockdown in their country. There are no supplies so far that we are receiving from the affected countries. Moreover, the general movement between China and Zimbabwe has been affected due to the coronavirus,” Confederation of Zimbabwe Retailers president Denford Mutashu told NewsDay Business.

“As you can see there is growing frustration among the general public due to the scare of the coronavirus and it is affecting the retailers that import goods and raw materials. This should be a great lesson for us as a country and the government to learn to capacitate ourselves to produce our own raw materials and goods because look at us, there is no coronavirus case recorded yet, but here we are.”
He said that at this point the country needed to hold on to its foreign currency.

“Even South Africa has been affected and their lockdown will definitely have an impact on us,” Mutashu added.

CZI chief executive officer, Sekai Kuvarika revealed that the organisation was conducting a survey on the impact of COVID-19 on industry.

“Let me get back to you once the survey is concluded today (Wednesday),” she said.

If imports are affected, it could lead to empty shelves.

Consumer spending
With Mnangagwa banning public gatherings of 100 people or more when fear over the spread of the coronavirus is growing, another area that could be impacted is consumer spending.

As the fall in the value of the Zimbabwe dollar is already significantly eroding the purchasing power of consumers, citizens are already reducing their spending.

But, with fear over COVID-19 more consumers could choose to remain indoors to avoid being exposed to the virus.

Added to that fear is the reality that medicines remain in short supply and expensive as well as the shortage of protective clothing against the coronavirus.

“Though we still do not have any confirmed case, the coronavirus has caused a scare and it might lead to companies, shops, retailers, suppliers and many other counterparts losing customers. Employers will quarantine themselves just to safeguard themselves against contracting the virus. This will depend also with the fact that some might be able to work from home though there might be no guarantee that it is possible,” economist John Robertson said.

“For the informal sector, it will also be bad as the informal sector depends on the volumes of people on the streets and if the coronavirus hits the streets of the country, the sector will be highly affected as there will be no customers to buy their stuff. There will be shrinkage in the purchases and the sales of goods. There will be supply change whether for the buyers or the sellers.”

He added: “There has been also the issue of the banning of activities, people will be staying in their homes, and there will be a shrinkage in activities, closure of shops. Shops might incur losses especially for perishable stocks as there will be no customers to buy the products”.

As consumer spending is the total money spent on final goods and services by individuals and households for personal use in an economy, reduced buying would translate to low economic activity.
Zimbabwe needs a stimulus package
The economy is already predicated to contract this year, according to the World Bank and African Development Bank.

With the potential threat of the coronavirus on imports, tourism and consumer spending, experts said the country needs a stimulus package to get it out of the woods.

“Since our greatest trading partner, South Africa, has been affected and with the way the virus is spreading so fast, business will definitely be affected due to the effects of the virus in SA. Commerce itself is the movement of people, so if people cannot move then business will be affected,” financial expert Persistence Gwanyanya said.

“If the situation worsens, the Beitbridge Border Post will be forced to close, and movement will be stopped, directly impacting on the economy. Trade with China has also been affected and demand for our tobacco will be affected. Our relationship with the Western countries that we recently started trading with will also be affected. The global economy is slowing down and Zimbabwe’s economy, which is highly dependent on imports, will also slow down.”

He added: “We definitely need a stimulus package for a lot of things actually. We are import-dependent, so if we cannot import, we definitely need a stimulus package”.

Without a stimulus, it would be difficult for the country to recover from the effects of COVID-19. As such a package could re-energise critical sectors of the economy to spur growth. ZITF Company had been operating without a substantive general manager since the resignation of Nomathemba Ndlovu in July 2018 For example, in the United States plans are underway to send cheques to its most vulnerable citizens to mitigate against the coronavirus.

2 Comments

  1. l think people from another countries should not be accepted in Zimbabwe because they are this virus.
    Zimbabwe does not have water bodies so it is not supposed to spread quickly in Zimbabwe
    L think to prevent this virus we should be indoors

  2. According to our defence minister. Covid 19 will only attack the west for sanctioning Zim.

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