The pandemic caused multiple shocks to businesses in Zimbabwe, with Most firms experienced a drop in demand, and disruptions to supply of input, raw material and merchandize for resale, a new report shows. Coronavirus has invaded all aspects of the Zimbabwean life from communities to companies, which have been forced to scale down operations.
In its latest report, Enterprise Surveys Follow-Up on Covid-19 ‘What Businesses Experience’, World Bank (WB) said large firms and those in the food sector seem to be impacted less. The survey was carried out on 813 firms between June 12 and July 13. “Close to 90% of formal businesses suspended operations (more than twice the figure in Zambia). Suspension was for about 7 weeks on average. Impact is largest among micro and small firms, in Harare, in the textiles sector and among exporters,” WB stated.
Firms have taken several measures to minimize the financial impacts of the shocks which includes repurposing and use of technology to boost demand and adjustment to workforce – about 37% of the firms have also reduced wages, while 26% of firms report reducing the number of permanent employees. On average firms shed about 10% of their full-time permanent employees compared to February 2020. Despite all the mitigation measures taken by firms, WB said, the pandemic has had significant effects on their financial wellbeing. For an average firm, sales in May/June contracted by 51% compared to the levels in 2019.
“The magnitude of the damage is further visible from the financial woes facing the business, where about 90% have reported having liquidity and cash flow shortages,” it said. “As a sign of potential ripple effect, about 64% of the firms had to delay payment to service providers and tax authority.” Recently, the southern African nation further relaxed the locked down measures that were aimed at limiting movement to curtail spread of the pandemic, with the economy now largely opened up.