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SMEs Sweat Over New Lockdown

Players in the Small and Medium Enterprises (SMEs) sector have expressed lack of preparedness to withstand a tighter level 4 lockdown set to take effect this week up to the next 30 days, 263Chat Business reports.

According to the new regulations gazetted over the weekend, public gatherings of more than two people and the operations of the commercial and informal sectors except for supermarkets and pharmacies will be prohibited.

With productive sectors of agriculture, mining and manufacturing having been spared from closure, the SME sector which is predominantly informal will be hard hit.

A survey by 263Chat Business revealed that most SMEs were not yet ready for a second tight lockdown.

“We resumed businesses in the later stages of last year and we hoped this year would be different unfortunately we are going back into lockdown. We had not really recovered from the first blow so this time around I’m not sure if my business is going to survive,” said one proprietor who runs a small clothing and beauty accessories business at Gulf Complex in Harare.

COVID-19 cases are on the rise in recent weeks with the country standing at a cumulative 15265 cases since the pandemic broke out last year prompting authorities to revert the country into much stricter level 4 rules.

The first lockdown in March of last year left most businesses in dire financial state.

Despite the absence of factual figures to establish how many enterprises and jobs were lost in the initial lockdown owing to the high levels of informality in the economy, the effects have been glaring due to rising poverty levels.

“We have done a survey and we are yet to come out with exact how SMEs view this coming lockdown but it’s obviously that this is going to be a difficult time. Last year when we opened up around October we had a couple of months in which little could be done as we were winding up the year. So it’s a bad timing for businesses,” SME Association of Zimbabwe, director Farai Mutambanengwe told 263Chat Business in an interview.

“The fact that its 30 days, I think it could have been made shorter initially, so that people come up with specific measures like last time when we had exemptions for SMEs,” he added.

He said the fresh lockdown could be a turning point for the survival of most businesses if government does not prioritize cushioning small businesses.

Government announced a ZWL$ 18 billion stimulus package in the initial round of lockdown last year with the SMEs sector allocated ZWL$ 500 million but interest rates attached to the loans were deemed excessive for bailout purposes thereby frustrated SME subscription.

“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.  We didn’t really get much support (from government) save for the ZWL$ 300 payments to the most vulnerable but we have to be cognizant that ZWL$ 300 was too little and everyone becomes vulnerable in a lockdown,” said Mutambanengwe.

Big companies are also expected to suffer losses in business given the inter-dependence of economic participants.

Some analysts are already anticipating a downward revision of the economic growth target that had been set at 7.4 percent this year under the assumption that in 2021 the pandemic will have weakened.

 

 

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