Chronicle (Zimbabwe) - - Business Chronicle - Busi­ness Re­porter

ZMBABWEAN busi­nesses should em­brace mergers and ac­qui­si­tions to re­vi­talise their op­er­a­tions in­stead of re­ly­ing on bor­row­ing which cre­ates more debt bur­dens, the Zimbabwe Na­tional Cham­ber of Com­merce (ZNCC) has said.

Sev­eral busi­nesses in both pub­lic and pri­vate sec­tors are sad­dled with debts that run into mil­lions of dol­lars while some have been forced to shut down as oth­ers lose prop­er­ties af­ter fail­ing to clear ar­rears to dif­fer­ent lenders.

The busi­ness lobby group says the cul­ture of bor­row­ing should be re­placed with syn­er­gies and part­ner­ships with lo­cal and re­gional play­ers.

ZNCC said in a state­ment that the eco­nomic con­di­tions in Zimbabwe at the mo­ment were not right for bor­row­ing.

“We are pro­mot­ing re­cap­i­tal­i­sa­tion of Zim­bab­wean firms through eq­uity as op­posed to debt. We be­lieve that debt is an ex­pen­sive form of cap­i­tal, which Zim­bab­weans can­not af­ford at present,” said ZNCC.

“As such, we are en­cour­ag­ing mergers and ac­qui­si­tions as a means of re­cap­i­tal­is­ing and re­viv­ing our lo­cal firms.

“It is our hope that this ini­tia­tive will yield the de­sired div­i­dend and that the wheels of in­dus­trial re­form will com­mence hence­forth.”

A merger refers to ab­sorp­tion of one or more en­ti­ties into an­other, all be­ing held by the same owner.

The Gov­ern­ment, work­ing to­gether with the busi­ness com­mu­nity, has been work­ing hard to lure ex­ter­nal in­vest­ment and fund­ing with lit­tle suc­cess.

In this re­gard, ZNCC will be hold­ing its fourth edi­tion of the Trade and In­vest­ment Op­por­tu­ni­ties Con­fer­ence (TIOC) in Bu­l­awayo next week Fri­day to dis­cuss the pos­si­bil­ity of in­creas­ing do­mes­tic pro­duc­tion ca­pac­ity through mergers and ac­qui­si­tions.

The event will fo­cus on pos­si­ble syn­er­gies be­tween Zim­bab­weans in South Africa who seek to in­vest in Zimbabwe through the South Africa-Zimbabwe Busi­ness Con­nec­tion.

The con­fer­ence will run un­der the theme “Re­gional Syn­er­gies for In­vest­ment Suc­cess”.

Mr Jus­tice Maphosa, who is the pres­i­dent of the South Africa-Zimbabwe Busi­ness Con­nec­tion, will at­tend the cru­cial event to­gether with of­fi­cials from the Zam­bia De­vel­op­ment Agency, Botswana In­vest­ment Trade Cen­tre, Jo­han­nes­burg Cham­ber of Com­merce and In­dus­try.

Lo­cal busi­ness ex­ec­u­tives from the Zimbabwe In­vest­ment Au­thor­ity, In­dus­try and Com­merce Min­is­ter Mike Bimha and Deputy Gov­er­nor of the Re­serve Bank of Zimbabwe, Dr Khu­phuk­ile Mlambo, will be among the key speak­ers.

Youth, Indi­geni­sa­tion and Eco­nomic Em­pow­er­ment Min­is­ter Pa­trick Zhuwao and Dr Obert Mpofu, the Min­is­ter of Macro-Eco­nomic Plan­ning and In­vest­ment Pro­mo­tion, will also at­tend.

The coun­try’s blue-print, the Zimbabwe Agenda for Sus­tain­able So­cio-eco­nomic Trans­for­ma­tion (ZimAs­set), re­quires close to $27 bil­lion to sup­port a va­ri­ety of eco­nomic projects in­clud­ing in­dus­try re­tool­ing.

Sur­veys in­di­cate Zim­bab­wean firms op­er­ate at around 43 per­cent ca­pac­ity util­i­sa­tion due to lack of re­cap­i­tal­i­sa­tion, ob­so­lete equip­ment and com­pe­ti­tion from re­gional pro­duc­ers.

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