Time to rescue local industries

HARARE - The failing and ailing local industries are literally having King Pharaoh’s Army behind them and the Red Sea in front. May the Moses of our time please stand up!

Since taking oath, Cabinet’s position on resuscitating local industry has been loud, clear and consistent.

The expectant industrialists can’t wait for that action any second longer.

The most immediate and terminal threat is the extent of menacing litigation that is sinking companies.

This has spread to even affect several listed companies. Deputy Sheriff, liquidators and lawyers are harvesting rich in winding up these companies leaving creditors poorer.

Some of the entities that are litigating against local industries, and in many cases winning in getting writs, are government departments and parastatals.

We have seen local companies’ valuable plants and machinery auctioned at paltry values by the courts to settle debts owing to Nssa, Zimdef, City of Harare and many others.

This simply shows that our government is blowing hot and cold on the recovery of local companies by letting their entities go after local industries’ properties.

It is foolhardy for Nssa to recover outstanding premiums from a company by selling its assets causing the loss of jobs of the remaining personnel who will end up attempting to make premature claims.

The debilitating prevalent credit crunch is affecting everyone including the farmers, peasants, traders, politicians and general citizenry.

Government has made a bold decision to ensure that the debt-ridden farmers are given space and allowed to produce for the country without the encumbrances of litigation for some period. Bravo to that!

It follows logic that the industries, which buy these agricultural produce must be afforded the same reprieve to ensure that the country consolidates on the levels of beneficiation of yesteryear.

The fall or failing of Cairns, Jaggers, Caps, Blue Ribbon, AfriAsia Kingdom, Dairibord and other 700 companies as reported in the Nssa’s Harare Regional Employer Closures and Registration Report of this month, happening under the watch of this country’s leadership is, at the least, regrettable.

While Government is making strenuous efforts to obtain fresh capital through the Bretton Woods Institutions and other sources, it must in the meantime execute rescue measures within its power that saves the few industries still operating, albeit on their knees.

A short to medium moratorium on litigation and evictions must be pronounced to allow companies to recover.

Many investors who are keen to invest in some local companies are being turned off by the ongoing litigation against these local companies.

More than 98 percent of Judgment Creditors are unable to recover their value through court process because the same liquidity challenges that confronts the judgment debtor is also affecting the would be bidders at the auction. So what’s the point?

Local lending banks’s balance sheet is healthier showing security held of defaulting debtors than auctioning these houses and recover a tenth of the value.

The current laws we are using to recover debt are no longer effective and relevant under the current financial crisis.

Government has been asleep when companies where levied the world’s most atrocious interest rate on the greenback of more than 20 percent per annum.

It seems we now have loan sharks masquerading as lending banks in this country.  The need to borrow in Zimbabwe at both company and government level, is at all time high but policy makers have not seen the need to come in and regulate these interest rates.

The revolutionary party’s manifesto on industrialisation recovery will not be achieved if the current mortality rate is not tamed.

At least in the absence of funds to capitalise industry, the powers that be must make sure that companies remain open.

Companies cannot to be seen to seek refuge at the courts on the basis of judicial management when the elected political leadership has all the legal instruments under its disposal to save the local ailing companies at the stroke of a pen.

The targeted 1000 companies will not be available for indigenisation.

It’s a pity that some of the most treasured plant and machinery, which are vital, are sold like flea market inventory. Whose interest are we saving? Certainly not the economy!

Lobel’s, the country’s pride was given another lease of life again thanks to CBZ, other progressive financial institutions and a competent management. Today, Lobel’s operation are enriching consumer product choices and enhancing food security.

It is urgent as it is critical to immediately stop haemorrhage of companies.

The utility debt cancellation on citizens must be extended to companies who provide income to these citizens.

Comments (1)

Well said, but due diligence of the affected companies must also be done before wantonly giving reprieve to self-inflicted harm so as to stem impunity to socio-economic misfits masquerading as entrepreneurs. I feel auctions of attached goods should be regulated such that assets should have a reserve value if indeed they must be disposed of as a last resort.

Peter Kambaru - 24 October 2013

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.