Mixed fortunes as more companies face closure

Zimbabwe companies have gone through hard times in 2014, as the majority of them accrued huge arrears while others were headed for complete shutdown.

Charles Msipa
Charles Msipa

While some companies enjoyed capitalisation and government protection of their products against foreign competitors, quite a number continued struggling to pay workers, inject capital as demand for their products remained depressed at the local market.

“The fate of the companies in general by end of this year would be difficult to predict, but the fact is that 2014 was difficult for them.

“However, there was notable upward capitalisation in some sectors of the economy, as some government incentives had started to bear fruit,” Charles Msipa, president Confederation of Zimbabwe Industries, told The Zimbabwean, pointing out that despite the economic hardships, companies would do their best to keep running until the environment becomes impossible.

According to the CZI’s 2014 State of the Manufacturing Sector Survey released in October, company closures in the country had reached alarming levels.

The prolonged effects of power cuts and costs, liquidity challenges, low domestic demand for products among others had weighed heavily on the economy.

A country staggering under the weight of an 80 percent unemployment rate, recently threw another recorded 365 workers on the streets while another 690 face the same fate when companies shut down for the festive season.

The National Social Security Authority has painted a gloom future for the country, as it estimated that 120 more companies would shutdown end of this month due to lack of capital and several other factors.

The development would render thousands of workers jobless. NSSA revealed that of late, the rate of company closures was as high as 10 companies per month. Other companies would quietly close shop without raising alarm.

Struggling companies are in sectors such as the motor industry, tourism, agriculture, security, furniture, mining, cement, engineering and timber.

Josephat Kahwema, vice president Employers Confederation of Zimbabwe, said the economic situation had gone bad as both the employer and worker were caught up in a difficult situation.

“The employer is not able to pay salaries and wages while the worker is not getting paid. “There is need for both parties to work together and improve the situation,” said Kahwema.

Japhet Moyo, secretary general Zimbabwe Congress of Trade Unions, partly blamed the company closures on the harsh economic environment ‘worsened by policy inconsistencies on the part of government’.

Patrick Chinamasa, the Finance and Economic Development minister, revealed during the presentation of his 2015 budget in parliament that since 2011 to date, some 4 610 companies had shut down leaving over 55 414 workers redundant.

“The economy continues to be dragged down by liquidity shortages, antiquated plant and machinery, cheap imports and high cost of production,” Chinamasa said.

Zimasco among the retrenching companies intends to lay off 1 300 workers by end of this month.

Mimosa Mining Company has applied to send packing 464 workers and Willowvale Motor Industries 101.

The shutdowns between 2011 and 2014 affected the tourism industry most, which had 2 142 companies shut, throwing 18 413 workers on the job market.

During the period under review, the construction sector saw 317 companies closing down sending home 3 651 workers home, 368 companies in the agriculture sector closed shop freezing the source of income of 5 465 workers and the manufacturing sector had 458 companies closed pushing 5 465 employees on the streets.

Despite the sad scenario, Chinamasa has remained optimistic that the economic growth would assume an upward trend come 2015.

Observers said Zimbabwe’s look East policy and BRICKS Investments in the country are yet to yield notable results on the ground through economic revival and job creation.

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Post published in: Economy