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Firms increase Covid-19 related spending

07 Apr, 2020 - 00:04 0 Views
Firms increase Covid-19 related spending An employee at a local company sanitises his colleagues before they start work. Many companies have invested significant amounts in workers’ safety in the wake of the outbreak of coronavirus

The Herald

Business Reporter

Zimbabwean companies are spending millions of dollars in their efforts to mitigate the impact of Covid-19 and protect employees, the latest snap survey conducted by business body, the Confederation of Zimbabwe Industries (CZI), reveals.

In order to assess the impact of the pandemic on the manufacturing sector, CZI is carrying out a weekly snap survey of the local industry with the latest survey having been conducted between March 25 and March 30, 2020.

According to the study, which got responses from firms in the insurance, food, beverages, tobacco, chemical, footwear, metal, clothing, printing and publishing sectors, the cost of mitigating the impact of Covid-19 as a percentage of the company’s annual expenditure budget was estimated at 14 percent on average.

“In an effort to try and mitigate the impact of Covid-19 and protect employees, surveyed companies used up to $1 162,142 and US$7 68,357 on average,” reads part of the survey.

The snap survey also revealed that most of the expenses companies are incurring are to do with the purchasing of protective clothing which include, face masks, spraying equipment, disinfectants, hand sanitisers and other protective clothing.

As a result of the Covid-19 pandemic employees and employers have been greatly affected.

According to the snap survey, 16 percent of the surveyed firms stated that they have sent employees on unpaid leave, while some have been forced to shut down and cannot afford to pay salaries ‘which is detrimental to the employees’ welfare since the majority live from hand to mouth.

“This will affect the welfare of the employees with downstream effects on education, health and distribution services.

“Aggregate demand will be negatively affected by loss of income for the employees, which affect industry operations and ultimately economic growth and development.

“This development has production and welfare effects on employers and employees, and the economy as a whole,” reads part of the survey.

Meanwhile, the snap survey also revealed that production and trading volumes declined by 36 percent on average mainly as a result of reduced workforce, temporary closure of the firms and disrupted supply chains.

Supply chains have been disrupted by this global pandemic, as countries are closing their borders and going into national lockdowns in a bid to try and contain the Covid-19 pandemic, which has resulted in more than 100 000 deaths globally.

“The local industry was not spared as the snap survey results showed that 81 percent of the surveyed firms experienced
supply chain disruptions.

“This has affected raw materials supply which is needed to keep industry rolling.”

The South African lockdown has had major impact in terms of raw material supply but in general firms are failing to access both source and export markets.

At least 28 percent of the surveyed firms said there are “greatly affected” in terms of access to both source and export markets.

In order to keep companies afloat, the CZI recommended that Government come up with cash flow packages to cushion employees and help companies with working capital.

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