Lockdown rules make business harder

09 Jul, 2021 - 00:07 0 Views
Lockdown rules make business harder Retailers across the country have been adversely affected by reduced trading hours.

eBusiness Weekly


Last Word

Zimbabwean business is coping with the Covid-19 waves of infection and the resulting intensifications of the lockdown, and is doing better than most in minimising infection in the workplace, but has made it clear that there is obviously an effect.

The Government, in its lockdown intensification, has done its best to keep the economy open, relying on the business sectors and the individual companies to keep a tight grip on their premises, staff and customers to minimise risks. The informal sector, where discipline can be lax without formal sealed premises and without someone able to use a disciplinary code to ensure compliance, has been given priority for vaccination.

In an interview this week, the president of the Confederation of Zimbabwe Industries Mr Henry Ruzvidzo, put Covid-19 as one of the main “at risk” factors for continued growth and expansion this year, along with assured power supplies, a stable exchange rate and low inflation. 

So far the other three factors are positive for industry. Zimbabwe does run short of power at times, with Eskom having to give priority to its South African customers so having to limit exports, and with the rehabilitation and expansion of Hwange Power Station not being an instant process, although there is regular progress.

But zesa has given priority to industry and other productive sectors when having to move into load shedding, with the residential consumers taking almost all the burden and bearing the brunt. 

The exchange rate under the auction system remains stable, and the stability appears to now be in a new phase where the small weekly adjustments are following the small weekly drift in inflation. The fairly lengthy process over some months where the exchange rate was allowed to drift down in real terms now appears to be over with markets, backed by the Reserve Bank of Zimbabwe, now fairly happy that the rate has found its true value.

Month-on-month inflation is low, very low by Zimbabwean standards, and when the July annual figure comes out in a week’s time everyone recognises that it will be around 55 percent, with the last and worst of the months that saw an exponential growth in the rate in the first seven months of last year falling out of the calculation. 

There will still be another significant drop in the annual rate next month, since the August figure last year was an interim one between the exponential curve before the auctions and the fairly steady straight line at a low rate from September, but we will be moving into the realm where the annual rate actually means something useful, rather than just a way of looking at combining two quite different mathematical functions.

So we now need to pay far greater attention to the movements each month and try and figure out their causes. Since September there have been bulges and dips, with the monthly rate climbing above 4 percent in January, basically reflecting Christmas season price rises since ZimStat records prices at the end of the first week in each month. 

It then fell steadily until April, reaching its lowest level for a long time, but a small bulge then appeared in May and June, when it hit 3,5 percent. Some of this bulge has been explained by rises in the price of raw materials and fuels on global markets as the world at least learned to deal with Covid-19 and economic recovery started, but it still needs to be watched closely.

For business, the main economic effect of Covid-19 comes from the lockdown provisions. Cutting working hours for most businesses to 8am to 3.30pm does reduce both labour productivity and capacity utilisation. Even with a modified half-hour lunch break a business is still down to seven hour days, for both workers and the machines they operate.

The desire where possible to reduce congestion at workplaces is another factor. In some businesses, such as most manufacturing enterprises, it is not really an option without reducing output. You cannot repair or run a machine at home. So the stress on workplace enforcement of masking and distancing rules is vital, as well as trying to figure out how to bring staff reasonably safely to and from work.

Some companies have their own transport, so can manage this problem directly and can enforce rules in the company bus. Others, probably most, rely on staff using public transport where compliance can be variable, to put it politely. 

The recent extra doubling of Zupco fares raises the risks, since the pirates are now significantly cheaper, although rising fast. Human resources managers are probably already getting requests from staff over transport allowances and certainly need to survey their staff to see what people are actually spending on bus or pirate fares. 

It might well be necessary to examine these allowances, but there would also have to be an element of trust in the negotiations that higher allowances would be spent on the safer Zupco options rather than the frequently unsafe pirate options. One interesting point is that Zupco are now putting in more routes that lead from industrial areas to residential areas directly. It is possible to take, for example, a single bus journey from Msasa to Chitungwiza and that service is popular and has killed one set of double pirate routes. More are likely to be needed since Zupco is rather conservative rather than market responsive.

There appears to be good grounds for the CZI, the Retailers Association of Zimbabwe and other business organisations to do a bit of research and then engage Zupco, on both the fare structure and the route structure. To expect a minimum wage employee to spend up to a quarter of their pay on Zupco fares will have serious knock on effects.

One programme that is still in its infancy is the proposal by the private sector to pay for and import through the Government 1 million vaccine doses. The setting up of the scheme was done well. But the follow up has been a bit ropey.

There are still good grounds for a factory owner to want the entire staff vaccinated as soon as possible. While vaccination is not perfect it does slash infection rates and having everyone on a large factory floor protected does help a great deal. When it comes to a mine and its neighbouring housing community obviously something a bit grander will make everyone work harder and sleep easier.

The business organisations that set up the scheme originally probably need to go back to members and start getting talk converted to cash. Even with vaccine delivery upgraded, with the Government now expecting to average 1,5 million doses a month, it is going to take a long time to vaccinate the population of Zimbabwe or even get to that minimum of 10 million where herd immunity will hopefully start kicking in.

Paying for extra imports will give those who pay higher priority for their staff, and perhaps with the shortage of vaccination teams large factory owners could even come to some sort of arrangement whereby they can use private nursing teams working under the supervision of just one assigned senior sister from the national programme. It is worth investigating.

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