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Liquidity crunch bites Zimbabwe

The liquidity crunch continues to bite, with many Zimbabweans saying they are failing to make ends meet, while businesses have experienced a serious downturn in sales.


On a good day, Ticharwa Muzangaza sells 50 plastic strap baskets. Today he would be lucky if the sales surpass 10.

“People are saying that they have no money,” he said at his base close to Matapi Police Station in Mbare.

Phibeon Chimalizeni is a commuter omnibus driver. Despite waking up as early as 5am, it is difficult for him to meet the US$100 target given by the vehicle owner.

“People have no money. Even during month end, meeting the target is a hassle,” he said.

Muzangaza and Chimalizeni’s plight is shared by many Zimbabweans following the withdrawal (by individuals) of at least US$1 billion in the banking sector a week before and after the July 31 harmonised elections won by President Robert Mugabe and Zanu PF.

The money has not returned and this has affected the banking sector, with queues re-emerging especially during pay days.

Retailers that normally enjoy brisk business in the run up to the festive season have said that tills are ringing at a slower rate this time around, as disposable income is constrained.

In its six months to September 30 financial results, retailer OK Zimbabwe recorded a limited growth in revenue as the liquidity crunch ate into shoppers’ disposable incomes.

It warned that business activity was not expected to improve for the remainder of the year “as consumer spending will remain constrained”.

Lifestyle Holdings, with interests in fast foods, furniture manufacturing and financial services, recently said its units have been affected by depressed demand as Zimbabweans adjust their spending in light of the harsh environment obtaining.

Group chief executive officer Tawanda Nyambirai told our sister paper NewsDay recently that despite Lifestyle adopting a cocktail of measures to contain rising operational costs, some of the company’s units remained in the red. This, he said, has also resulted in some branches being closed.

“Furniture products being capital products have seen significant reduction in demand as disposable incomes came under pressure from the liquidity crunch that the country is facing,” Nyambirai said.

Companies are failing to sell their goods due to the depressed disposable incomes. In turn the companies that fail to sell goods have passed on the burden to employees — failing to pay salaries. To date, some workers have not been paid for the past 10 months.

A number of companies have retrenched employees with the Zimbabwe Congress of Trade Unions saying at least 300 employees were being retrenched weekly.
Banks are unable to offer long-term lines of credit due to the short-term nature of deposits. As a result, companies are starved of long-term funding necessary for re-tooling and a boost in output.

A number of companies that have accessed funds from banks are failing to repay as their products are uncompetitive in the wake of cheap imports.

Analysts say the country can wade-out of the liquidity crunch by attracting foreign direct investment, boosting exports and creating confidence in the banking sector to attract depositors.

5 Responses to Liquidity crunch bites Zimbabwe

  1. Busu December 1, 2013 at 10:26 am #

    We grow cotton, export raw cotton and import second hand clothes. Still colonised and love to put clothes discarded by the white man. How can industry survive?

    • johnson machingura December 1, 2013 at 4:59 pm # said it very well.i coundnt have said it better myself.

    • Chamboko December 1, 2013 at 7:34 pm #

      We buy cheap clothes because we can’t afford new clothes. We also copy our dear leader. Who despises Zimbabwean hospitals colleges when was the last time you saw Mugabe shop from Edgar’s. As long as we have an illegitimate government we will continue to sink in economic quick sand

  2. sammy December 1, 2013 at 11:23 am #

    As long as we Africans let thugs and imbeciles like mugabe and zanu steal our lands, we will always be some foreign countries colony.

    How long is the white person going to be blamed for black savagery and incompetence, perhaps until the end of time maybe?

  3. Manuwere Masikokodo December 1, 2013 at 11:21 pm #

    This reminds me of the day i complained to a traffic cop telling him their 4 impromptu kombi tollgate roadblocks on Seke rd were making us get to work late & told him if workers become unproductive by being late,the Police won’t be able to also get those $ from kombis & he replied saying mari haifi yakapera pa road,ivo havaishaye even if people become unproductive at work. So much for the mentality of our traffic cops.

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