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Supporting businesses and protecting jobs in a time of crisis

Filed under: Business,Health & Nutrition,Latest News,Special Comments |

By Hakainde Hichilema
Life favours the prepared. This statement is particularly relevant today as the COVID-19 pandemic continues to cause massive disruptions to economic activities across the World. It is increasingly becoming clear that the global economy is at the cusp of a very deep recession. Early economic data show that both advanced and emerging market economies alike are registering severe contractions that could surpass the downturn of the global financial crisis. These external events will have significant effects on the Zambian economy.
There is much that we can do, as a country, to mitigate the full economic impact of this deadly virus and protect jobs and the poorest amongst us. In addition to the macroeconomic measures announced by the Ministry of Finance and the Bank of Zambia, we call for direct support for priority businesses to minimize the disruption of commerce and avoid significant job losses.

To address this unprecedented economic challenge and in national interest, we, therefore, call for an urgent national virtual conference of stakeholders to agree on measures to keep the wheels of commerce turning whilst protecting the health of our people. We urge participants to focus these exceptional discussions on, among other things, the formation of initiatives in the following cluster areas:
(i) supporting access to capital;
(ii) addressing inventory and supply chain disruptions;
(iii) managing costs;
(iv) supporting taxpayers; and
(v) leveraging external assistance.

The following are some specifics on these fronts:

  1. Supporting Access to Capital: Establish an Economic Disaster Loan Program that will provide low-interest loans to businesses that have been severely impacted by COVID-19. Working through registered lenders and integrated with the Bank of Zambia’s Targeted Medium-Term Refinancing Facility, support should be provided in the form of term loans, overdrafts as well as invoice and asset financing. For firms deemed to be operating in priority sectors, Government should consider covering the first three months of interest payments. This must be accompanied by the settlement of outstanding Government remittances to the banking sector.
  2. Addressing Inventory and Supply Chain Disruptions: The Government and business should urgently work together to put in place a secure Business Continuity Financing and Logistics Program to facilitate the delivery of goods and services, particularly exports. Part of this program should aid firms develop business continuity plans and financing (e.g. revolving lines of credit or transaction-based financing) to enable firms fulfil their export orders.
  3. Managing Costs: The Government and business should work together to address difficulties firms will face in covering key operating expenses, particularly utilities. We call for the suspension of some utility bills and the discontinuation of service disconnections for 2-3 months for firms in priority sectors. This suspension should also take into consideration the financial position of utility firms and should be configured accordingly. By the same token, a similar approach could be applied to commercial rent for shops supplying essential goods under a Rent Relief Initiative. We also propose a targeted three-month interest payment moratorium supported by the Targeted Medium-Term Refinancing Facility.
  4. Supporting Taxpayers: The Government should consider giving taxpayers additional time for dealing with tax affairs. Extension of filing and tax payment deadlines, deferral of tax payments, easier access to debt payment plans, extension of plan duration/time to pay agreements and suspension of penalties, interest and debt recoveries should form part of this relief plan. Further, Zambia Revenue Authority should quicken refunds to taxpayers, temporarily change the audit policy, provide quicker tax certainty and enhance taxpayer services and communication initiatives. As part of this support, a program to re-schedule filing and payment of taxes should be considered for priority sectors and businesses that will be hardest hit by the pandemic.
  5. Leveraging External Assistance: The Government and the business community should work together to access external programs that have been announced to support businesses secure affordable working capital and better manage risks. We call on Government to advance its engagements for pandemic support from the World Bank Group, International Monetary Fund and G20 rescue packages that have been announced, especially the US$8 billion support program by the International Finance Corporation to assist businesses overcome liquidity and solvency risks.

The rapid global rise in the infection rate calls for urgent action by key stakeholders in Zambia to mitigate the health and economic impact of this pandemic that will affect our people. We must move fast and be well-coordinated in our national response. We must also establish well-designed programs that safeguard human life and economic well-being. We must all work together – business associations, financial institutions, regulators, political parties, labour representatives, Government, development partners and think tanks – in finding solutions in our collective fight against COVID-19.

Together we shall get through this.


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