Covid-19 has hit the world very hard. As if the disease itself wasn’t bad enough the measures put in place to prevent its rapid spread may just be worse as lockdowns across the world have affected businesses and the way business is done. While it may seem obvious which businesses have been affected there are some.salient issues to consider and some.combined effects at play. These are the most affected industries and as things stand will continue to be going forward.
Hospitality
Hospitality is, of course, an umbrella term for those involved in tourism and all along its value chain. One of the first things to go was international travel, particularly to China. As things got worse for the rest of the world travel was put under the spotlight. Next on the radar were gatherings which were frowned upon in some territories and banned in others. The effects for hospitality will be felt long after the pandemic ends, whenever that is. Lockdown has affected incomes and operations of businesses large and small. With incomes depressed across the board spending on tourism and hospitality will not be on anybody’s priority list for a while and that could prove fatal for many in the hospitality sector.
Entertainment
Entertainers have suffered greatly due to the pandemic but not all and certainly not equally. For those who practised their trade through large performances and gatherings, the effects are pretty much obvious. While some have been able to continue their entertainment efforts through online platforms, the ability to earn through these channels has not followed. Entertainment distributors such as YouTube, Netflix and other streaming services have a different end of the stick as they have seen surges in usage.
Transportation & Petroleum
Perhaps this is the hardest hit. With travel out the door, the demand for petroleum for fuel dropped. as if that wasn’t enough the general lack of work travel during the lockdown, reduced demand for transport & logistics and lack of travel for any reason sent the demand for petrol crashing. So much so at one point future contracts for crude oil were trading at below zero. Of course, the future outlook for this industry is not the worst, travel and transportation will pick up as the rest of the world resumes normal activity if that is possible.
Real estate
Real estate seems like a safe bet but during this crisis, there are many things to consider. Ordinarily, people being stuck in their houses would make paying rentals a priority. The situation is markedly different for commercial real estate particularly where the lessee in question was either informal or non-essential and therefore not earning during the lockdown. Add to that the government throwing a spanner in the works by effectively allowing tenants who were unable to make rental payments due to lockdown to roll over the arrears as a debt payable in 3 instalments after the lifting of lockdown. Construction projects have also been halted due to lockdown to the detriment of an industry which works on time and budget constraints.
Finance and investment
While other industries were affected directly, in finance and investment circles the effects are secondary or indirect. Yes, with tenants unable to pay rentals mortgages are under threat of default. The government stepped in to provide relief similar to that afforded to tenants. In a time of crisis, patterns change and many investors pull out money to either invest in safe-haven assets or draw on investments to supplement their depressed incomes. Investment markets across the world took heavy losses while locally the ZSE gained but fell further behind inflation. Again the outlook for equity markets is not good in the short run. With many listed companies operations affected by lockdown, their earnings will certainly take a hit and in turn their valuation. Add to all this the likely spike in loan defaults and this industry could be feeling the effects for a very long time.
The pandemic has affected many more industries, these are the hardest hit. In the Zimbabwean context, the informal sector may prove to be the hardest hit but it could not be grouped as an industry. It has not all been bad news as other businesses have found good fortune in the crisis.
Hi there
My name is Julian Hanmer . I follow your alerts and Updates . I reside in Johannesburg . So tell me I’m following with keen interest , the demand for LPG in Zim. Is this market demand still under pressure ? Do we see a marginal increase in the demand or can i assume that Zimbabweans are beginning to rapidly see the benefits of using gas an alternative to electricity.
I’m trying to get a read or opinion on this.
I’m a partner in a Managing Consultancy and I would appreciate your input all be it just a few words on the subject.
Bets Regards
Julian
Hello, Julian thanks for getting in touch. LPG demand remains high in Zimbabwe. However, inflation through the foreign currency crisis makes electricity a cheaper alternative as the electricity price is controlled (in local currency) while LPG prices are pegged in US dollars at the parallel market rate. The main advantage of gas in Zimbabwe is control over its availability. I hope that answers your question.