IT’S not a secret that the coronavirus pandemic is not only a health hazard but has also uprooted the world’s economy.
Not one country, from the financial movers and shakers in the world to the struggling least developed countries have been spared.
The catchword throughout the world has been how to stem the damage to not only individual countries’ economies but global financial markets.
We want to applaud the Bank of Zambia (BoZ) for having pumped in a K10 billion medium-term refinancing facility to provide medium term liquidity which will be reviewed as conditions warrant.
This is one of the comprehensive measures to safeguard financial system stability, promote the greater use of digital financial services and mitigate the negative effects of this shock on the economy in the wake of the Covid-19 which is ravaging the whole world.
BoZ Governor Denny Kalyalya yesterday said this was a three to five years facility that will be available to eligible Financial Service Providers (FSPs) to enable them restructure or refinance qualifying facilities or lend to eligible clients.
The move by the central bank should certainly bring a collective sigh of relief to the business sector as they try to maneuver their way through this uncertain period.
As Dr Kalyalya said, although the full impact of the Covid -19 shock on public health and the economy could not be determined at the moment, indications were that it will be unprecedented.
According to the International Monetary Fund (IMF), the economies of sub-African countries face a triple threat from the coronavirus which means revenues will take a hit just as spending needs to ramp up to contain the pandemic and treat citizens.
It says sub-Saharan countries face three related threats.
First, measures that have been introduced to slow the spread of the virus will have a “direct cost on local economies.” “The disruption to people’s daily lives means less paid work, less income, less spending, and fewer jobs.
And, with borders closed, travel and tourism are quickly drying up, and shipping and trade are suffering,” states IMF.
Second, projected slowdowns in major global economies will see world demand for goods fall. “Countries are likely to also see delays in getting investment or development projects off the ground.”
Third, the sharp decline in commodity prices will hit oil exporters hard. “The price of oil has tumbled to levels not seen in decades. We don’t yet know where they will settle, but with oil prices already down by more than 50 percent since the start of the year, the impact will be substantial.”
It adds that the health of citizens must be a priority. “Yet, now is no time for half measures. Without exception, people’s health is the priority and countries should boost health spending accordingly.”
The BoZ certainly has its work cut out, keeping the Zambian economy ticking and the more reason why the nation must welcome and support its efforts to maintain stability in the economy.
In Kabwe yesterday, the local Chamber of Commerce and Industry (KCCI) said financial support to the Small and Medium Enterprises (SMEs) is needed to enable them to continue operating in the wake of the Covid-19 global pandemic outbreak.
KCCI president of the Kabwe Chamber of Commerce and Industry (KCCI), Christabel Ngongola Reinke said support towards SMEs during this period was crucial because they form the basis for any economy.
“We are pushing for SMEs support because they form the basis for any economy, they supply to big corporates, multinationals and employ more than large corporate companies,” said Ms. Reinke.
With industry and financial markets adversely affected by the slowed economic activities, the business sector will definitely need help to keep afloat.
It is our hope that the K10bn medium-term refinancing facility to provide medium term liquidity will also trickle down to businesses that need the most support.
As Ms Reinke said, Government should come up with a package to help the SMEs stay alive during this Covid-19 crisis when economic activity was being suppressed by the disease impact.
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