BY TATIRA ZWINOIRA
BUSINESS is fretting over the possibility of a Covid-19 third wave, with captains of industry warning this week another stringent lockdown would push the economy over the brink.
There have been growing concerns recently that the complacency witnessed countrywide could trigger a deadlier third wave of the pandemic.
The situation is being compounded by the resistance by the majority of the population to participate in the government’s vaccination programme, with just over 230 000 people being inoculated in a population of around 15 million.
Complicating matters is the low efficacy rate of Chinese sourced vaccines as recently revealed by the Chinese Centre for Disease Control and Prevention head, Gao Fu.
A third wave could badly affect the economy which has already been negatively affected by two waves from March 2020.
“It is clear a third wave would have far reaching consequences on stability and the broader economy because it entails another shutdown. It entails reducing economic activity,” Monetary Policy Committee member Persistence Gwanyanya said.
“The situation is fragile as it is, so anything that would compromise the current traction would have a negative impact on stability.”
He said the government needed to put in place supportive fiscal and monetary measures and continue with the vaccine rollout to ensure that the economy remained functional.
Government projected a 7,4% rebound in the gross domestic product (GDP) and is expecting revenues of ZW$390,8 billion (US$4,65 billion) this year.
The growth is anchored on improved agriculture and mining sectors where the government expects an 11,3% and 11% rebound from a contraction of 0,2% and 4,7%, respectively, in 2020.
The growth of agriculture is based on a good rainy season while mining depends on increased production and firming international prices.
“Any external factor which is the effect of the coronavirus would then affect the monetary stability,” Gwanyanya said.
He said the government needed to keep strengthening different critical sectors through sound policies to negate any effects of a possible Covid-19 third wave.
Manufacturing sector could be hit hard if a third wave erupts.
“That would be tough; extremely tough. Last year, the impact was quite significant…companies were distressed,” Confederation of Zimbabwe Industries (CZI) chief executive officer, Sekai Kuvarika said.
“If we get a third lockdown, it would be very difficult for companies struggling with working capital to operate in the midst of a whole host of challenges.”
In CZI’s 2020 Manufacturing Sector Survey Report released last month, the confederation called for ample notice before the implementation of a national lockdown. It also called for guidelines on exemptions and non-exemptions to avoid confusion.
CZI also stated that there is a need for a well communicated Covid-19 vaccination strategy.
Government says that 150 000 formal jobs were lost owing to Covid-19. But labour unions put the figure at much higher than that.
These job losses were due to company closures as non-essential companies could not operate and even those that could were forced to cut jobs to reduce expenses owing to depressed consumer activity.
Businesses operating at less than full capacity, in particular, had revenues and profits affected leading to decisions that contributed to job cuts.
This has left both informal and formal workers unable to make ends meet.
Zimbabwe Congress of Trade Unions president Peter Mutasa said there was a need for social safety nets and a robust social programme to assist the unemployed.
Failure to implement such programmes, Mutasa warned, would result in further job losses.
“Without a comprehensive plan we are going to see a lot of job losses in the informal economy because even on the vaccination drive, the sector has been left out.…and we know that the government would respond (to a third Covid-19 wave) through a lockdown. This will cause serious challenges,” he said.
“That is a sector that has 76% of the jobs that we have in this country so the effect would be devastating. So companies will simply shut their operations and have people lose jobs. Not just jobs, but incomes.”