Zimbabwe: Small Businesses Need Post Pandemic Stimulus Package

opinion

Implications of the Covid-19 are far-reaching. It is a global health crisis with heavy socio-economic consequences.

Some experts are saying it is easier for the world to recover from a war than an unpredictable novel virus of this kind.

Hope now lies with scientists, who are working to find a pharmaceutical solution to the crisis which has forced a quarter of the world indoors.

In the meantime, the world is reading from China's manual effecting lockdowns meant to reduce infections and flatten the curve. Results from Asia show that lockdowns are useful in containing the spread of the virus, but come with painful economic consequences.

Among those who are being affected by the imminent global economic crisis are small and medium enterprises (SMEs) in Zimbabwe. These are businesses with relatively small revenue and profitability.

In economies like Zimbabwe, SMEs are run mostly by youths and work with low capital bases. These companies usually have a lean staff complement and operate on a hand-to-mouth basis. This means every day counts, as the profit enjoyed is a culmination of marginal gains collated over a period of time.

"There are no guarantees in our business, everyday counts, this is why you see there are no off days for people in our trade," Tendai Vhurundiya, who runs a printing shop at the back of a hair salon in Harare Central Business District, told The Herald.

The three-week disruption may extend and this may force some businesses into dire positions.

Business collapse in the time of Covid-19 will not be a uniquely Zimbabwean reality as many economies will encounter such cases.

South African Airways which was becoming a thorn to the fiscus may struggle to return without scratches.

From Canada to England, the tale remains, small businesses are going to need vaccines too when Covid-19 ends.

Their lack of capacity in setting aside cash and assets as contingency in times of this nature means they may struggle to continue operating. Even fixed costs like rentals which are supposed to be planned for with a long term perspective, still remain a bill settled monthly by these small businesses.

There is need for Government as it aligns its war chest, to set money aside for the resuscitation of these small companies that together with the informal sector which is credited for sustaining almost 80 percent of livelihoods in Zimbabwe.

It is obvious some companies will not be able to raise rentals for May even if the 21-day lockdown ends on the intended date. This applies to staff payments. Large companies have started hinting at possible retrenchments or suspension of salaries if Covid-19 persists.

If corporates with fat bank accounts are unsure of the future, one wonders how a small cellphone accessories shop will survive. In times like these, responses to medical disasters do not only happen in form of medicines, but there has to be thinking around curing the economy which is the first casualty.

Zimbabwe's economy revolves around small enterprises. There is need for money which will help these small entities restock if they are in retail, clear debts and acquire stock for future business.

Some rely on single contracts which have already been disrupted and may see them being cancelled. There is need to ensure they get insulation.

The collapse of business will increase pressure on the job market as those who have felt the inconvenience of seeing a business crumble will be averse to experiencing a repeat of their misfortune.

It is likely to result in former workers at these small businesses and the owners flocking to the few large businesses that would have survived the pandemic.

Some policies may end up hard to sell to the youth. For instance, Government through its Ministry of Higher and Tertiary Education, Innovation, Science and Technology Development is pursuing Education 5.0 which is aimed at encouraging young people to set up small businesses after graduation.

Over the years, this message has been finding resonance within its intended audience because many young people were making progress in different sectors. People like Kuda Musasiwa of Fresh In A Box are among those who have been lights in youth run business.

Businesses like his, need to survive this Covid-19 disturbance, that way thousands of aspiring entrepreneurs looking to implement his model will not be demoralised.

There have been cries that companies need to transition over time, what was a sprouting company 10 years ago, should at this point be a structured entity.

Such pandemics affect business capacity and those who have grown to the point of employing may lay off workers or face reduced productive capacity.

This will have consequences on the country's gross domestic product. The level of production in the country may take a beating if the losses which will be made by all these small businesses during Covid-19 outbreak are not mitigated.

Fortunately, Zimbabwe is alive to the concerns. Finance and Economic Development Minister Professor Mthuli Ncube released a list of measures to deal with the effects of the pandemic.

These include a partial tax relief.

"Treasury will ensure that Zimra expedites processes on refunds and requests for extension of the time period within which tax is payable without accruing interest and penalties for companies that shall experience Covid-19 related cash flow challenges," Minister Ncube said.

Government is also working to expedited Value Added Tax refunds to affected businesses. For flexible companies, it may not be all doom and gloom as an olive branch has been extended by Government.

"Government is engaging and supporting the local industry to identify capacity to locally produce within the shortest possible time, basic food stuffs, and pharmaceuticals and provide services as an import substitution measure," said Minister Ncube.

This stands as an opportunity for small companies to come to the fore and be counted. They should embrace this opportunity to diversify their production at the same time earning money during the dry lockdown period.

US-based car manufacturer Ford is venturing into ventilators, closer to home United Refineries is moving to manufacture hand sanitisers. Small businesses should take hints and adjust to ensure they survive this present health scare with economic implications.

Those who cannot be flexible enough or are in the service sector, may need a shot in the arm once this is over. It would not be the first time Zimbabwe has assisted small businesses.

After the January 2019 vandalisms in Bulawayo which were politically-motivated, Government released a loan of $30 million which was given to small businesses to resuscitate their operations. The same can be done.

America has a US$2 trillion stimulus package part of which is going to small businesses, South Africa has set aside 3,7 billion rands aimed at small businesses only. Zimbabwe may be unable to match the figures being achieved by other countries, but it surely needs to have a vaccine for the economy in form of a stimulus package, especially for fragile small businesses.

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