FORMER Confederation of Zimbabwe Industries (CZI) president and United Refineries chief executive Busisa Moyo has warned this week that industry could grind to a halt if the government extends the 21-day national lockdown which ends this Sunday.
Moyo, who is a member of President Emmerson Mnangagwa’s Presidential Advisory Council (PAC), says that 82% of companies are likely to fail to pay salaries beyond a month, hence a government bailout will be required if the lockdown is extended.
“WHILST FLATTENING THE CURVE IS NEEDED, WE NEED A STRATEGY THAT SHELTERS AND CUSHIONS THE INDUSTRY BECAUSE NO COMPANY WILL BE LEFT.
“Eighty-two percent of the companies can only pay one month of the salaries. It means that if we go into month two, companies will fail, so will people continue to go to work?” Moyo said in an interview with the Zimbabwe Independent.
Moyo told the publication that local companies will require a stimulus package to remain operational after capacity utilisation tumbled to zero due to the current lockdown.
He said a bailout package was crucial for industry.
“It depends on how long the lockdown is. If the lockdown is extended, we will definitely need a bailout package. Since most companies cannot pay salaries, it means that thereafter you will have problems with thin capitalisation, going concern.
“Fights are already beginning with auditors on going concern issues. So, these are big challenges. We didn’t have a lot of reserves so we have to watch it. It’s going to be very challenging,” Moyo said.
Last week, Air Zimbabwe sent its employees on unpaid leave while other companies, particularly the hospitality sector, fired contract workers.
With Covid-19 cases on the rise, President Mnangagwa may extend the lockdown, a move that could further cripple an already struggling economy.
Last week, the President warned that he would do everything possible to preserve lives, adding that the economy could always be resuscitated another day. – Zimbabwe Voice