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Enacy Mapakame Business Reporter
Although industry has experienced challenges due to Covid-19 induced shutdowns, the same have created renewed interest for locally produced goods.

Confederation of Zimbabwe Industries (CZI) president Henry Ruzvidzo, said the pandemic had also created opportunities for growth for local industry as demand for some local products increased since the lockdown was effected.

Following the outbreak of the pandemic, countries closed their borders restricting movements which resulted in supply chain disruptions.

“Supply chains were disrupted but this has also increased interest in locally made products that the market used to import.

“This is an opportunity to increase capacity to meet the demand for some local products which is improving and also bridging the gap left by imports,” he said during an online fifth edition of the economic development outlook discussion hosted by Global Renaissance Investment (GRI).

The discussion was themed ‘Digital and smartech for economic boom-fourth industrial revolution.’

Mr Ruzvidzo said the pandemic is worsening local industry’s cost of doing business in an already fragile operating environment.

Production has been severely affected as businesses shut down in line with observing lockdown regulations and social distancing.

Although Government relaxed some of the lockdown restrictions to allow industry and commerce to resume operations, local industry has a new threat in the form of increasing costs of doing business.

Mr Ruzvidzo said transport costs to ferry staff to and from work, cost of personal protective equipment (PPEs) as well as information and communication technology costs are some of the extra costs that did not exist before Covid-19.

These are adding strain to already existing challenges such as foreign currency shortages, erratic utilities supplies, high inflation and waning disposable incomes.

“Today some companies may have to provide transport for employees where they can observe proper social distancing as well.

“This is in addition to more safety and hygiene procedures when handling goods at all levels. These are issues industry never used to worry about prior the pandemic.

“We now need to ensure we have robust ICT infrastructure as well as internet connectivity because we are going digital, our meetings are now virtual, which calls for good connectivity,” he said.

Meanwhile, local firms across sectors have felt the Covid-19 pinch at different degrees with others already recording reduced output, while others are to feel the impact in the second half of the year and going forward.

Commercial property experienced challenges in rental collections as tenants worked from home while observing lockdown requirements. Mining firm Unki, reported production declines during the second quarter of 2020 due to disruptions caused by the pandemic, while cement maker Lafarge expects sales volumes decline in the second quarter of the year on subdued demand.

Others are yet to quantify the effects of the pandemic.

Fielding questions during the same webinar Reserve Bank of Zimbabwe Governor Dr Mangudya, said the exchange rate is already flattening on both the formal and parallel market, while also projecting month-on-month inflation to drop to as low as 5 percent in the next few months.

“Our job here is about price stability. Right now we are pleased by the fact that the parallel exchange rate has not been increasing over the past four weeks. We have seen that there has been a curve that is now going downwards and the rate is flattening at that level,” said Dr Mangudya.

He said the auction system will not entirely eliminate the parallel market, noting in other countries at least 10 percent of foreign exchange go through the informal market.

What is important is flattening the premium between the market exchange rate and the parallel market exchange rate, said Dr Mangudya.

“We need to have about 80 to 90 percent of transactions to take place in the formal market. We believe we are narrowing the curve.”

He said because of what is happening on the foreign currency front, outlook for month-on-month inflation from July 2020 onwards should not be more than five percent.

Inflation should be between zero and five percent from July going towards the end of the year resulting in a year-on-year inflation outlook of 300 percent, said Dr Mangudya.

He, however, said the inflation outlook will depend on the continuous success of the foreign currency auction trading system.