Coronavirus to erode Zim’s tobacco, FDI and diaspora remittances earnings – ZCTU
THE Covid19 pandemic will affect projected tobacco earnings and other export commodities leaving the nation poorer and in urgent need for social safety protection from government, Zimbabwe Congress of Trade Unions position paper has said.
The labour organisation’s paper was submitted to government through the social dialogue platform, Tripartite Negotiation Forum.
The document says the outbreak and spread of COVID-19 coincides with the country’s 2020 tobacco marketing and trading season and will have a negative impact on earnings in that sector.
“Tobacco is one of the country’s major foreign currency earners, with export earnings reaching US$142,2 million by February 2019, an increase of 122 percent from US$63,5 million recorded in the comparative period in 2018,” ZCTU said.
The labour union said the major importers of flue-cured tobacco, namely China, South Africa, selected European countries, among others are among the hardest hit by COVID-19 which means there will be depressed demand.
Slow recovery in these countries will likely have an impact on the country’s export earnings.
The same scenario will apply to mineral exports and associated commodities as a result of depressed demand from China and advanced countries following COVID-19 impact on their economies.
Already the lockdown in China has resulted in a decline in demand for steel and iron ore which is likely to cause a domino effect of commodity prices of such minerals which the country relies on for export revenue.
“As an exporter of raw commodities, Zimbabwe is likely to be negatively affected, posing threats to its economic recovery,” said the ZCTU.
Diaspora remittances will also slow down because most Zimbabweans are based in countries hardest hit by the pandemic.
The labour union said humanitarian assistance will severely dwindle as wealthy countries will channel surplus resources to support their government in mitigating the pandemic’s effects.
“The outbreak and spread of COVID-19 will negatively affect global Foreign Direct Investment flows. The UNCTAD March 2020 report projected a negative impact of COVID-19 on global FDI flows ranging from -5 percent to -15 percent in 2020 which will not spare Zimbabwe,” ZCTU said.
The union projects that the hardest hit sectors will be tourism, health, retail and the services sector hence the need for government to put in place robust mechanisms to provide social safety nets for its citizens.