Zimbabwe faces 'industrial Armageddon'

HARARE - With a boom in corporate deal-making, including mergers and retrenchments amid a deepening liquidity crisis, companies need contentious due diligence if they are to avoid costly lawsuits, a top legal expert warned yesterday.

“Companies need legal advice today more than ever,” Obert Gutu, an international corporate legal consultant, said.

“Without the necessary legal advice companies may find themselves facing lawsuits or other losses which are in fact avoidable.”

“Necessary legal advice for companies in such a climate include signing any documents; to carry out fair labour practices; in forging partnerships for capitalisation, among a host of others. Most, if not all, corporate companies in both the public and private sector are facing serious liquidity challenges and as such, there is invariably a need for them to synergise with foreign companies to form joint ventures or in the case of state corporations, to enter into public private partnerships (PPPs).

“Thus, there is always need for local corporates to conduct an efficient legal diligence before formally committing themselves to joint ventures and or PPPs. Corporates are strongly advised and encouraged to always seek and obtain legal advice before transacting any serious or big business.”

According to the CZI-sponsored Manufacturing Sector Survey 2013, capacity utilisation tumbled from 44 percent in December 2012 to 39,5 percent in October, with the economy in apparent free fall.

Eve Gadzikwa, Zimbabwe Stock Exchange chairperson, said the situation was grim. 

“It is an industrial Armageddon,” Gadzikwa said adding only 10 out of the 74 listed companies were in good shape.

“The rest are tottering.”

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