Industry finalises EU tour preps

HARARE - Zimbabwe's distressed manufacturing sector — through the Confederation of Zimbabwe Industries (CZI) — is finalising preparations for a European Union tour expected to unlock fresh capital and bail-out facilities.

Charles Msipa, the federation president, yesterday told Businesssdaily that plans were at an advanced stage for the group to embark on the tour, also aimed at promoting investment in the country.

“We are meeting tomorrow (today) with others to map the way forward,” he said.

Msipa noted that the local industry was committed to the success of the government’s economic blue print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) which has identified foreign direct investment as an important aspect of resource mobilisation to support economic growth.

This comes as local industry — still stuttering from the aftermath of a decade-long recession — faces a myriad of challenges including an acute liquidity crisis, limited access to capital, water and electricity shortages, as well as high labour costs and ageing equipment.

According to the CZI 2013 manufacturing survey, the majority of companies in Zimbabwe are operating below 40 percent of capacity utilisation.

Local and foreign-owned companies have over the years downscaled or closed, resulting in massive unemployment.

Zimbabwe’s unofficial unemployment is around 90 percent — one of the highest in the world — while government’s figures put it at 11 percent.

Economic experts also claim that the indigenisation law, which compels foreign-owned companies to cede 51 percent of their shareholding to locals, has played an instrumental role in scaring away investment.

“It is important that the European investors and businesses are actively encouraged and engaged so that they consider investing in as many sectors of the economy as possible,” said Msipa.

“The engagement will take the form of small discussion groups with targeted investors and businesses. We are confident that we will get a good reception and this could be followed by an investment conference in Zimbabwe in June,” he said.

The trip by CZI follows a similar one taken by the European Investment Bank last year.

The Investment bank carried out exploratory missions and envisaged launching new development initiatives with the private sector.

Economic relations between Zimbabwe and the European Union became frosty at the turn of the millennium when President Robert Mugabe embarked on a controversial land reform programme aimed at redressing colonial land imbalances.

Since then, the southern African country’s voting rights were suspended by the International Monetary Fund due to its failure to pay back external debts and an appalling human rights abuse record, resulting in clogged credit lines and a sharp decline in foreign direct investment (FDI).

However, following the establishment of the unity government in early 2009, trade between the European Union and Zimbabwe has doubled over the past five years — with experts expressing optimism in the bloc’s future engagements, adding that the current trade balance ratio is favourable to Zimbabwe.

Comments (2)

End of Robert Mugabe The current president of the Republic of Zimbabwe, Robert Gabriel Mugabe will die on Monday, the 3rd of February 2014. Actually I had a dream on the 20th of January 2014 that Mugabe will die on his sleep. This death will not result from poisoning, gun shot, physical strangling basically there will be no foul play and it will be strictly natural death. This prophecy concludes that Mugabe will demise as a result of natural causes. Ndini; Tichatonga Mambo (Zimbabwean)

Tichatonga Mambo - 24 January 2014

Mr Msipa why are you not looking east instead of going north (read west) You are going to talk to those who have imposed 'sanctions' on us. Get real. This will just turn out to be a joy ride as nothing will come of it.

saundy - 27 January 2014

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