The manufacturing sector, battered by a host of operational challenges, now pins its hope on the Cabinet-adopted reforms to improve business.
BY NDAMU SANDU
This comes as the economy is stuttering, weighed down by the absence of affordable long-term financing, policy inconsistencies and failure to attract foreign direct investment.
Confederation of Zimbabwe Industries (CZI) president Charles Msipa told The Standard last week that the sector hoped that a cocktail of measures to be spearheaded by the Ministry of Industry and Commerce would pull the sector out of the doldrums.
The measures include a revision of water and electricity charges, review of levies and taxes charged by municipalities and a review of the Labour Act to allow companies to retrench.
“We are putting faith and stand ready to work with policy makers to see the implementation of those measures,” Msipa said.
Other sectors of the economy are also feeling the pinch amid fears that growth will be further subdued in 2015.
The International Monetary Fund (IMF) said last week that economic prospects remained difficult for Zimbabwe.
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“Growth has slowed, and we expect it to weaken further in 2015. Despite the favourable impact of reduced oil prices, the external position remains precarious, and the country is in debt distress,” it said.
The banking sector is also withering, having soldiered on since the introduction of the multi-currencies in 2009.
Since the beginning of the year, two banks — Allied Bank and AfrAsia Bank Zimbabwe — have had their licences cancelled due to undercapitalisation, throwing hundreds of employees onto the streets and locking up millions of depositors’ funds.
The banking sector is expected to shed over 1 000 jobs in 2015 having chopped the same number last year.
“The wheels are off. The banking sector has been the latest to fall and this signifies that the crisis is now full blown,” a banker said.
Since the advent of the multi-currencies, the capacity of the local banking sector to finance the economic requirements of the various sectors of the economy — which is a function of domestic deposits growth, credit lines and exports growth and regulatory or prudential guidelines — has been constrained.
Analysts say funding in a multi-currency regime depends on a few sources that include export earnings, diaspora inflows, offshore credit lines, foreign direct investment inflows and capital transfers including grants.
A senior trade unionist told The Standard yesterday that the situation was dire for the worker.
“It’s not rosy for the worker. Some companies closed for the festive season last year and they have not reopened. Many employees are owed salaries for over 10 months and a number of companies in the textile industry are under judicial management, a testament that all is not well,” he said.
The unionist said there was no hope for the economy as government was not addressing the problems afflicting companies such as lack of long-term financing among others.
“There is hope if government begins to tackle the challenges facing the economy. But government is clueless and it knows that,” the unionist said.
The erratic rain, coupled with flooding in some areas, is likely to impact negatively on agricultural output. This means that the country will have to fork out more in importation of staples. Already, over 70% of the revenue generated is gobbled by salaries for the civil service.
“The revenue collection agency Zimra cannot collect enough since companies are closing. Government is in a tight situation because it cannot retrench its employees since it promised to create 2 million jobs by 2018 during its election campaign,” an economist said.
