The Sunday Mail
Business Reporter
Local companies are expecting an improved performance in the short-to-medium term despite a generally weakened performance in the prior year due to the Covid-19 pandemic.
The coronavirus has had an impact on companies’ outputs and on consumers’ buying power.
Consequently, production capacity and sales have largely contracted, although there have been some exceptions.
Local firms are, however, expectant of an up-tick in business in the outlook due to varying factors including the commencement of the Covid-19 vaccination programme on Thursday, with the initial batch of 200 000 Sinopharm vaccine from China.
In its latest trading update, starafrica corporation said the Government’s Covid-19 vaccination could normalise business climate.
“The company also remains optimistic that the envisaged vaccination programme by the Government of Zimbabwe will yield positive results for the nation in the restoration of normalcy to the trading environment,” said starafrica company secretary Aldo Musemburi.
“The company has maintained enough inventory quantities to hedge against any supply chain interruptions caused by the pandemic and continues to improve its liquidity and solvency position through prudent working capital management practices.
“The board remains confident that the ensuing quarter will witness enhanced stability in the market which will boost capacity utilisation of the company as demand for the company’s products is expected to remain strong locally and in the region.”
Even from the wider global perspective, expectations are that vaccination programmes will work to ensure economic recovery.
“Progress with vaccines and treatments, as well as changes in the workplace and by consumers to reduce transmission, may allow activity to return more rapidly to pre-pandemic levels than currently projected, without triggering repeated waves of infection,” the International Monetary Fund (IMF) has said.
Sugar producer Hippo Valley Estates is anticipating improved output following the positive wet season.
“The above-normal rainfall season experienced to date, has significantly enhanced water security for the industry. With Tugwi-Mukosi Dam spilling for the first time since its commissioning in May 2017, and Lake Mutirikwi at over 60 percent of its capacity, 75 percent of the sugar industry’s irrigated cane area, is adequately covered for at least three seasons (at normal water duty).
“With the rainfall season forecast to continue until the end of March, Lake Mutirikwi is likely to impound more water, thereby further improving industry water security,” said Hippo chairman Dan Marokane in the company’s Q3 to December 2020 trading update.
Diversified hospitality group, Meikles Limited anticipates good performance from its agriculture businesses and export crops during the forthcoming financial year on the back of the good rains and improved electricity supplies for irrigation.
“The good rains received this season bodes well for the group’s agriculture segment and growth in export crops is expected in the forthcoming financial year.
“Our dams are full and power, which is essential for irrigation and estate factories will be available not only from traditional sources, but also from the solar projects,” said Meikles company secretary Thabani Mpofu in a trading for the third quarter and nine months to December 31, 2020.
More broadly, observers cautiously see an improvement in consumption levels due to previous as well as anticipated salary reviews — especially for Government workers — which bodes well for companies.
Says IH Securities: “The Government awarded civil servants a non-taxable US$75 risk allowance (now converted to ZWL) to hedge against the rising cost of living and the effects of the pandemic. Salaries for this largest formally employed work-group were also gradually increased through extensive labour union negotiations in light of the rising cost of living in a hyper-inflationary environment.
“We expect constant gross national income (GNI) per capita to increase as the economy moves past the initial shocks from the virus but consumer spend might remain subdued if the local currency slides against the US dollar again cancelling out the recent increases in salaries.”
