THE acute liquidity crunch on the market has had a major impact on construction projects, despite Masimba Holdings acquiring a record order book.
BY KUDZAI CHIMHANGWA
The company’s confirmed order book for the period ended June 30 this year stood at an all time high of US$56 million.
Orders are pegged across various sectors such as telecommunications, mining, commercial and industrial buildings and housing projects among others.
Masimba Holdings chief executive officer, Canada Malunga said the company continues to be confined to medium sized projects with the poor liquidity in the market having a major impact on construction.
“We have a huge order book which is running in excess of US$50 million, but the execution of that order book and delivery thereof are major problems because of liquidity, customers just can’t pay,” he said, adding that the scourge of liquidity is at the company’s doorsteps.
He said the will was there, but liquidity would continue to dictate the pace at which works could be completed.
The company noted that although the order book looked good, it was the implementation of various public sector projects that were likely to be slow, given the underperformance of the fiscal revenues that have in the main been applied to recurrent expenditure at the expense of gross capital formation.
“We have to pay more to our suppliers than we are actually receiving from our debtors and that is beginning to be a bigger problem, everybody is demanding cash,” he said, adding that the company has to deal with a dicey balance on a daily basis.
The company’s exposure to government stood to the tune of US$5 million as at the end of June and Malunga said that he believes the government is going to pay, as all the requisite certificates are in place.
He said there was absolutely no dispute in terms of the debt with government.
The company has about four government-funded projects, with the Tokwe Mukosi dam project being funded significantly.
The dam project, he said, was now reaching a critical stage of completion and had been progressing very well.
Malunga said the Joshua Mqabuko Nkomo International Airport should be coming to completion in the next few days, as all debts had already been paid after more than 15 years of work.
“We urge the government to prioritise the implementation of sound policies and incentives to promote the key sectors of agriculture, mining, infrastructure and social services,” said company chairman Greg Sebborn.
Sebborn said that the next six months of trading were likely to be subdued while the new government takes effect and begins the task ahead.
Accounts payable or other liabilities stood at US$10,8 million as at the 30th of June 2013 as compared to US$13,7 million during the same period last year.