EMBRACE MERGERS, ACQUISITIONS: ZNCC
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.