'No industry recovery in sight'

BULAWAYO - Zimbabwe's industry recovery, particularly in Bulawayo, is minimal in 2013 due to challenges which are likely to persist, a leading independent economist Eric Bloch said.

“Nationwide, industry is confronted with grievous insufficiency of working capital, catastrophically decimated financial resources exacerbated by money market illiquidity and miniscule investor interest,” Bulawayo-based Bloch said.

Zimbabwe’s industries have failed to recover since the decade long economic decline.

Liquidity and viability problems have culminated to the shutdown of many companies in Bulawayo — the second largest city — with over 80 having closed last year while several others relocated.

Bloch said Zimbabwe needed to mend its strenuous political relations with the world’s powerful economies to enable access to capital, bolster liquidity and lure investors.

He said lack of essential utilities like reliable power and water supply, which enable smooth running of industry, will continue to hamper recovery prospects.

While many companies shut down, thousands of employees were left jobless.

Bloch said value addition of products and state-of-the art technology is a panacea to the collapsing industry.

“Bulawayo needs a revamp of existing industry, which still has a substantive infrastructure and considerable labour force expertise, concurrently with the establishment of new state-of-the-art technology industries (mainly focussed upon value-addition to Zimbabwean primary products).”

However, government provided $40 million under the Distressed Industries Marginalised Areas Funds (Dimaf) to bail out the companies, but few companies have so far benefitted from the facility.

“The 2012 Dimaf ‘bottlenecks’ have now been eliminated, and therefore Dimaf is beginning to aid the recovery of a few industries.  However, total funding committed to Dimaf is only $70 million, whereas in excess of $1 billion is required for a meaningful resurrection of Zimbabwean industry,” Bloch, who is also advisor on Dimaf, said.

This comes as Industry minister Welshman Ncube has accused Finance minister Tendai Biti of holding Zimbabwe’s economy at ransom by not availing funds to resuscitate struggling industries.

In November last year, Ncube — responsible for overseeing industry’s “health” — said his ministry was frantically trying to revive collapsing firms, efforts which demand Biti’s financial support.

Biti is supposed to bail out the country’s clambering companies through two key facilities — the Dimaf and Zimbabwe Trade and Industry Revival Facility (Zimtref).

“I am saddened by the prolonged process in availing funds set to be disbursed to kick-start failing companies.

“The funds needed to meet our primary proposals are yet to be unveiled, while a few companies have benefited from the scheme in Bulawayo,” Ncube said.

He said the future of Zimbabwe’s industries heavily depends on the immediate provision of the funds.

“Cabs has not disbursed even a quarter of the $40 million allocated for failing companies under Dimaf, while more than half of the funding allocated under Zimtref is yet to be disbursed. This has resulted in little progress towards boosting our industries,” he said.

“It’s surprising to hear a bank demanding proof from applicants whose firm is a failing company.”

In his 2013 national budget, Biti said government would embark on second phases of Dimaf and Zimbabwe Economic Trade Revival Facility (Zetref) with more funds to be disbursed.

He allocated $70 million for Zetref. - Bulawayo Correspondent

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