'Zim firms undercapitalised'

HARARE - Zimbabwean companies risk total shutdown amid indications that the majority of them are registering turnovers of less than $5 000 annually, a new study has shown.

According to the Zimbabwe National Statistics Agency (ZimStat), about 30 percent of the firms operating in the country failed to break the $5 000 revenue barrier in 2012 while only two percent had an annual turnover above $1 million.

In its Central Business Register Inquiry Report (CBR), launched in the capital yesterday, the data agency noted that most local companies were undercapitalised.

The CBR inquiry was conducted between August 2013 and June 2015 covering all establishments operating at fixed locations in Zimbabwe which were either registered or licensed both by any arm of government excluding ministries.

“In the CBR inquiry, turnover was referred to as the annual volume of sales of goods and services for the year 2012… About 32 percent of the annual turnover was realised in the wholesale and retail trade, repair of motor vehicles and motorcycles industry, followed by about 28 percent of turnover coming from manufacturing industries.

“Less than one percent of national business turnover was realised from real estate activities and human health and social work,” ZimStat database manager and CBR co-ordinator, Perfect Makumbe, said.

While the study was done from 2012 to 2015, the economy has deteriorated further with companies

shutting down and growth projections being slashed towards the negative.

Makumbe said of the companies with an annual turnover of less than $5 000, 10 534 had four or less employees.

“Forty-six (46) had an annual turnover of more than $1 million and more than 500 employees.

“Seven had $500 000 or less as annual turnover and employed between 100 and 500 employees,” the ZimStat boss said.

Meanwhile, in the Survey of Services 2013 report, ZimStat indicated that the national value for gross fixed capital formation in major firms stood at $654,7 million.

Gross fixed capital formation refers to the net increase in physical assets within the measurement period.

Referred to in the report as SS1 establishments, major firms had the highest income of $7,1 billion and the highest expenditure of $3,9 billion with Harare Province constituting 99,5 percent and 70,1 percent of the total income and total expenditure respectively.

“Results by industry show that the wholesale and retail trade, repair of motor vehicles and motorcycles industry received 47,6 percent of the national value of income realised,” the data agency said.

In SS2 establishments —  informal companies — the total income realised was $2 billion while the total expenditure (excluding compensation of employees) stood at $1,2 billion.

“Results by industry show that the highest expenditure of $575 million was incurred by establishments in the wholesale and retail trade, repair of motor vehicles and motorcycles industry.

“A total income for all establishments was $12,5 billion while total expenditure excluding compensation of employees was $6,9 billion. The information and communication industry contributed the highest proportion of 66,8 percent,” the report showed.

Gross fixed capital formation for SS1 establishments in rural areas constituted 0,8 percent of the national value while the remainder of 99,2 percent was in urban area establishments.

However, in SS2 establishments, the national value for gross fixed capital formation was $100,2 million.

“The total gross fixed capital formation for all establishments was close to $755 million,” the ZimStat survey showed.

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