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Zim Companies Struggle With April Rentals

Zimbabwe’s hard pressed companies are finding it difficult to settle April rentals with property owners after spending the whole month under lockdown resulting in loss of business and revenue, 263Chat Business has established.

The country went into total lockdown to curb the spread of Covid-19 on 30 March with most companies forced to close doors while a few-mainly the big retailers and food producers who were handed essential service status- remained operational, albeit with very limited capacity.

The lockdown restrictions have been partially relaxed as more and more companies are starting to open shop at a time rental obligations for the previous month are due.

Even though, business remains generally low and companies are struggling to gain traction.

Leading retail operator, OK Zimbabwe is among a host of other companies who find themselves in this predicament and in its business continuity plan is engaging landlords for rental reduction for the respective months.

“To minimize the impact of the pandemic and the lockdown the company implemented the following measures; engaging landlords for rental reductions to match with the level of activity in the stores,” company secretary, Margaret Munyuru said in a statement this morning.

“OK Zimbabwe was classified as one of the essential service providers and thus allowed to trade, though for reduced hours. Movement into the central business district of major cities and towns was restricted and this saw the company’s six Harare CBD stores being closed in the month of April 2020. A number of our key suppliers could not operate as they were not part of the essential services and this disrupted the supply chain,” she added.

A 2020 First Quarter Property Market Report done By real estate consultancy firm, Integrated Properties predicted an increase in rental arrears in second quarter due to the effects of the lock down.

Clothing retailer, Truworths is also engaging its landlords on feasible rental payments having realized subdued cash flows during the period.

“We have entered into negotiations with landlords on feasible rental payments for the month of April 2020 and rental levels from May 2020 and beyond,” the company said.

The company has managed to open 30% of its store establishment as a cost cutting measure citing traffic volume in the CBD have been low.

However, Government last month announced a reprieve for companies and individual tenants stating that companies should be able to pay equal monthly rental installments over the course of three months.

“that any unpaid rentals due for the period from April to end of the lockdown be paid in equal installments after the declaration of the lockdown period together with the rental payments due for those months,”

“that both residential and commercial properties be afforded a moratorium on evictions in respect of applicable lease obligations due for the period from April to the end of the lockdown, including the payment of rentals due for those months,” a government statement read.

Observers have however criticized the move saying it doesn’t forgo the rental debt but just lengthens its grace period at a time most companies are already struggling to stay afloat in a difficult economy.

Government has also been castigated for its failure to avail a timeous bailout package to resuscitate companies  who have been adversely affected by the Covid-19 lockdown.

 

 

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