Resilience- is the best word that describes Zimbabwe’s economy since the turn of the millennium and under the current COVID-19 induced lockdown.
The unpleasant situation has watered down prospects of turning around fortunes of the country which now hangs in the balance.
According to figures released by the International Monetary Finance (IMF) last month, the economy declined by 10 percent in 2020 and is expected to register a 2.5 percent growth in 2021.
This was before the government announced a second lockdown which will obviously force the government to revise downwards earlier growth projections for the year.
In contrast, COVID-19 cases have sharply increased with the country recording high numbers since the pandemic broke out in April last year.
For the economy, the impact will be devastating and sustenance of businesses and industries, particularly the manufacturing sector that was yet to recover from the first lockdown will be difficult.
“Our economy will be adversely affected. We are expecting declines in the manufacturing, tourism and the SMEs sectors considering that the economy is SME- driven,” economic analysts, Pepukai Chivore told 263Chat Business in an interview.
“If the massive informal sector which contributes around 52 percent to GDP is currently under lockdown, then it means the GDP is definitely going down this year because of the lockdown and the associated restrictions,” he added.
The situation is further complicated by government’s inability to secure a rescue package for struggling businesses affected by the latest lockdown.
On this aspect, it appears authorities failed to take lessons from the first wave of the virus.
A ZWL$ 18 billion bailout package announced by government last year, spread across various sectors of the economy failed to bring relief to businesses due to stringent borrowing terms for bailout purposes and failure to identify the deserving recipients.
Of the total package, SMEs sector was allocated ZW$500 million, manufacturing, health and mining sectors got ZW$1 billion each. ZW$2, 4 billion was set aside for social welfare and food grants for the vulnerable in society.
ZW$6, 1 billion was allocated to agriculture while the tourism and hospitality sector ZW$500 million.
A number of companies have expressed failure to subscribe to the stimulus package citing high interest rates of around 20 percent, a grievance government has not rectified during the second lockdown.
“When we went to these financial institutions to get loans the conditions were the same as their normal commercial terms so ultimately there was no assistance,” said SME Association of Zimbabwe, director Farai Mutambanengwe.
However, other external developments such as the closure of the South African border with Zimbabwe until February 15 are expected to affect SME operations locally as cross border traders rely on merchandise from the southern neighbor.
On the flipside, there is hope for the economy given the good rainfall which is tipped to revamp the agriculture sector and provide cushion against uncertainties clouding optimum performance in other sectors.
Already, massive investment has been poured into the sector and a huge chunk has been put into production as the sector is expected to grow 11 percent this year.
Other sectors such as the ICT and health sectors have already seen steady growth during the pandemic due to increased remote working (ICT) and anticipated investment into medical facilities.