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Zim restaurants operators sweat over lockdown massive losses

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ZIMBABWEAN restaurant operators — whose businesses employ thousands of people and are inextricably linked to various economic sectors — are fretting over intensifying bleeding of their operations due to the devastating impact of Covid-19 and the rigid lockdown.

BRIDGET MANANAVIRE

Restaurants Operators’ Association of Zimbabwe (Roaz) is pushing for the re-opening of the hospitality and food service industry under Covid-19 compliant conditions to save their businesses, jobs and the broader economy which is reeling from the shattering effects of the pandemic.

Roaz says government should move quickly to allow restaurants to reopen while balancing saving lives and livelihoods — big dilemma for governments around the world.

The hospitality and food service industry has been badly hit by Covid-19 lockdown restrictions largely in place since March 2020, with operators fearing an escalation of permanent closures, job losses and dwindling of tax revenues to ensure public and social service delivery.

Operators say government should urgently intervene to save businesses by among other things allowing them to reopen for sit-down meals and drinks, while also providing relief funding and exempting the sector from some taxes.

The hospitality, food and beverages sector is critical for economic recovery and growth in Zimbabwe.

The United Kingdom economy grew by 4.8% between April and June, according to official figures, as most businesses emerged from lockdown.

Data from the Office for National Statistics showed that the expansion in gross domestic product (GDP) was fuelled by retail, restaurants and hotels.

Zimbabwean hospitality sector operators say government take note of this.

UK growth in the second quarter contrasts with the first three months of the year, when the economy shrank by 1.6%, while Covid restrictions were still in place.

Chancellor Rishi Sunak told the BBC: “Today’s figures show that the economy is recovering very strongly, exceeding many people’s expectations.

“But I’m not complacent. The economy and our public finances have experienced a significant shock. It is going to take us time to fully recover from that.”

The impact of Covid-19 on the Zimbabwean economy has been ravaging.

The number of employees in the sector is estimated to have dramatically declined from between 9 500 and 11 000 as at March 2020 by at least 2000.

The job carnage has also filtered to the sector’s suppliers of goods and services that include small-to-medium enterprises (SMEs), agriculture, commerce, industry, financial services, ICT services, transport services, arts and entertainment.

Job losses within these SMEs and within larger operations could reach as high as 3 500, according to research done by Roaz.

The grave concerns of business run in the face of Finance minister Mthuli Ncube’s optimistic predictions which seems to ignore reality on the ground and the damage inflicted on the economy by Covid-19.

Delivering his budget and economic review speech on 29 July, Ncube said GDP growth for the year is projected to remain strong at 7.8%, slightly above the 2021 national budget growth forecast of 7.4%.

“The strong rebound of the economy is anchored on better 2020/21 rainfall season, higher international mineral commodity prices, stable macroeconomic environment and Covid-19 pandemic response measures, including vaccination programme,” he said.

“Higher growth rates are projected in agriculture, electricity generation, accommodation and food services, as well as financial services.”

However, conversations within Roaz show business is looking at things differently and in fact is panicking as their operations continue to hemorrhage from Covid-19 and economic problems that precede the pandemic.

As part of measures to show how desperate the situation is and how serious they were about providing safe spaces, Roaz members have been conducting vaccination drives to ensure that their staff members are vaccinated, with at least 1000 restaurant workers having been inoculated so far.

Government a fortnight ago gave restaurants operating in Victoria Falls the green light to operate for sit-downs after opening up the Kazungula and Livingstone border posts to fully vaccinated tourists.

This week cabinet also allowed churches to conduct in person services, but only to vaccinated congregants.
Restaurant owners say they should also be allowed to do business, having suffered for more than a year.

Since lockdown began at the end of March 2020, the hospitality sector experienced a crisis with one of the biggest restaurant chains Simbisa, saying its operations had been affected up to 50% by the level four lockdown.

The operators estimate that as many as 2 000 jobs have been lost since March last year, with loss of contract work affecting almost all the estimated 2 500 contract workers, according to a research the operators conducted.

The research estimates the future of up to 100 SMEs service providers is under threat as the continued closure absence may result in the collapse of some entities and staff lay-offs.

“It is estimated that between 450 and 500 business operations form the principal supplier base for the trade. Of these, 15 percent are large-scale operations while the remainder are small to Medium Enterprises,” a research by the operators says.

Among the large suppliers, income from restaurants accounts for anything between 5 percent and 20 percent of overall income, while for the SMEs there is a higher dependency, with reports of income from restaurants of between 40 percent and 100 percent of total income.”

Roaz says although they appreciate the measures put in place to curb the spread of the coronavirus, their impact on business has been devastating.

“Since the initial lockdown of 30 March 2020, it is estimated that up to 100 restaurants have not re-opened, having not been able to survive the initial closure and the subsequent partial operation phases,” Roaz says in a position paper.

“As has been stated in the Roaz position paper on the effects of lockdown, this has created a severe financial crisis for the restaurant trade, which appears to have borne the brunt of action taken to control or eliminate Covid-19, and as the time of writing is still unable to perform the only task that allows for reasonable viability: full operation with sit-down diners.”

Roaz says a number of measures could be implemented to save the sector.

“It is now clear that a series of financial measures need to be provided to save the restaurant trade from collapse and to ensure that operators can enjoy recovery. The alternative will be closures and job losses, as indicated with facts in the position paper,” it says.

“Exemption from payment of VAT and corporate tax for a period of six months from initiation of the measure. This will create a situation in which price competitiveness can be created for businesses in the trade.

“Receipt of urgent relief funding from government to restore viability to businesses. It is estimated that such funding should be equivalent to income earned for the equivalent period of full operation, for each business. Where a business has been able to enjoy a lifeline income through takeaways, this income can be deducted from the required total relief funding.”

The operators also suggested an extension of the tourism rebate on duties paid for capital goods to cover restaurants, as well as inclusion of a restaurant rebate on imported inputs to allow restaurants to upgrade and re-stock at a more affordable level of expenditure.

“As has been pointed out in the position paper, the restaurant trade is on the brink of collapse, and implementation of these measures is required urgently to save businesses and possibly allow for the return to the trade of businesses already closed,” Roaz says.

Restaurants contribute 40% of the Zimbabwe Tourism Authority (ZTA) revenue.

Restaurant owners also recommended formation of a Restaurants Survival Task Force with representation from Roaz, Tourism Business Council of Zimbabwe, ZTA, Ministry of Finance, Ministry of Environment, Climate, Tourism and Hospitality and key local government authorities, especially those in Harare, Bulawayo, Mutare, Gweru, Masvingo and Victoria Falls.

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