Pres­sure mounts on Zim­babwe to ad­dress its liq­uid­ity chal­lenges

The Star Early Edition - - BUSINESS REPORT - Tawanda Karombo

MORE Zim­bab­wean com­pa­nies could close if the gov­ern­ment and the busi­ness sec­tor failed to come up with mea­sures to ad­dress liq­uid­ity chal­lenges, cost struc­ture and de­layed pay­ments buf­fet­ing the economy, the Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) warned yes­ter­day.

Fi­nance Min­is­ter Pa­trick Chi­na­masa has pro­jected eco­nomic growth of 1.7 per­cent for Zim­babwe this year, but busi­ness lead­ers and com­pany ex­ec­u­tives are scep­ti­cal of this growth rate. Last year Zim­babwe’s eco­nomic growth rate was a pal­try 0.6 per­cent.

Now the CZI, which rep­re­sents big man­u­fac­tur­ers, is en­gag­ing the gov­ern­ment to come up with so­lu­tions.

“Com­pa­nies could close and we could end up with a dire sit­u­a­tion,” the pres­i­dent of the CZI, Bu­sisa Moyo, said yes­ter­day.

The rep­re­sen­ta­tive group­ing had lob­bied the gov­ern­ment to adopt the rand for use in Zim­babwe last year but Harare turned this down and moved for­ward to in­tro­duce lo­cal bond notes that are hold­ing the fort so far. The bond notes have equal value to the US dol­lar in Zim­babwe.

How­ever, in­dus­try rep­re­sen­ta­tives in Zim­babwe are still push­ing for “in­ter­nal de­val­u­a­tion” which es­sen­tially rep­re­sents the cut­ting down of prices, tar­iffs and other costs such as labour. In­dus­try lead­ers and gov­ern­ment of­fi­cials will meet to try to come up with so­lu­tions to the economy on Jan­uary 26 in Harare.

“Com­pa­nies are ap­ply­ing for short work­ing hours and are lay­ing off work­ers. All man­u­fac­tur­ers have been af­fected ad­versely by de­layed pay­ments (pre­cip­i­tated by liq­uid­ity chal­lenges),” Moyo said.

The out­look for this year looked bleaker, ac­cord­ing to in­dus­try sources, but the up­com­ing to­bacco mar­ket­ing sea­son would pro­vide some sort of respite for the economy in terms of for­eign cur­rency earn­ings.

Some com­pa­nies are look­ing be­yond the short-term out­look, with PPC an­tic­i­pat­ing in­creased pro­duc­tion from its new plant in Harare, while the Delta Cor­po­ra­tion has lined up two new beer-man­u­fac­tur­ing plants in the coun­try.

But signs of a strug­gling economy are ev­ery­where, with peo­ple still lin­ing up to with­draw cash and com­pa­nies reel­ing un­der a heavy tax sad­dle.

Ear­lier this week the gov­ern­ment an­nounced new steep tar­iffs for mo­bile data, which will see the cheap­est mo­bile data charge giv­ing sub­scribers about 10MB for 50c, with a por­tion of this ex­pected to go into a health fund and other taxes.

The gov­ern­ment ex­tended its beg­ging bowl to di­as­pora Zim­bab­weans to re­mit more money home and fi­nan­cial ser­vice firms are ink­ing part­ner­ships to tap into the mar­ket.

Econet Wire­less said yes­ter­day that it had part­nered with Trans­ferTo to boost re­mit­tances from South Africa through the Mama Money fi­nan­cial ser­vices com­pany. The part­ner­ship will en­able Zim­bab­weans set­tled in South Africa to send money straight into EcoCash mo­bile wal­lets of friends and rel­a­tives.

The CZI said this year Zim­babwe had to “elim­i­nate the ex­ter­nal pay­ment back­log” that was af­fect­ing pro­cure­ment and sup­ply of goods and ser­vices while the gov­ern­ment had to “ad­dress the cost com­pet­i­tive­ness” of the economy.

Zim­babwe’s liq­uid­ity is­sues have put firms at risk of clo­sure, though the to­bacco mar­ket­ing sea­son is ex­pected to pro­vide some eco­nomic respite in terms of for­eign cur­rency earn­ings.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.