THE prevailing liquidity crunch and inability of most manufacturing sector companies to access external lines of credit due to negative country perceptions are hampering production,the Zimbabwe National Chamber of Commerce (ZNCC) has said.
BY KUDZAI CHIMHANGWA
Zimbabwe cannot access lines of credit from multilateral institutions such as the International Monetary Fund and the World Bank due to the country’s US$10,7 billion external debt.
Local banks can access offshore lines of credit, but at a huge cost due to policy inconsistencies and politicking in the inclusive government. This has had a trickle-down effect on the country’s manufacturing sector, as the country heads for elections expected later this year.
ZNCC Vice-President David Norupiri said in the first quarter of 2013, the manufacturing sector has already been seriously affected by this scenario which was likely to persist.
“As long as we are still in the electioneering mode, it will be very difficult for companies to plan the way forward, so it’s really affecting business because no one is willing or prepared to spend money,” said Norupiri.
He noted a “disturbing trend”, where the manufacturing sector companies continued to close and scale down operations.
Companies based in Gweru, Mutare and Bulawayo are seriously affected by the strenuous business environment with some of them forced to relocate to Harare.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Zimbabwe’s economy has been on a growth trajectory since 2009 and the chamber contends that the country needs to sort out its internal problems which include a high risk country profile, dependence on foreign aid and raw exports as well as examine its competitiveness.
A 2012 Confederation of Zimbabwe Industries Manufacturing Sector Survey revealed that capacity utilisation in the manufacturing sector declined from 57,2% to 44,2%.
The best performing sub-sector was the battery line driven by the importation of second-hand Japanese cars flooding the Zimbabwean market.
“But a number of companies have come up with their own strategies whereby they create 90 day facilities with individual companies that supply them with raw materials, giving them a short- term reprieve in the process,” Norupiri said.
He said such innovation was assisting companies to survive as compared to the expensive facilities accessed locally.
“Quite a number of companies have managed to re-align themselves to ensure that they produce products which match international standards because we are competing with products from China and South Africa therefore you cannot survive if you do not meet the standards,” Norupiri said.
The chamber argues that there is an urgent need for policy re-alignment as the present policies assume that the country is still a manufacturing hub.
The trade policy assumes that Zimbabwe still has its traditional markets in place and there is need to redefine this, he said.
