Zimbabwe economy rebound pie in the sky

Finance Minister Patrick Chinamasa

ZIMBABWE’S economy continues to be in the doldrums despite the government claiming it is on the rebound, industry officials have said.


Over the years, government officials have been talking about an economy on the rebound.

In his mid-term review, Finance minister Patrick Chinamasa said the economy was on the rebound, projecting an economic growth of 3,7% this year against the 0,7% achieved last year buoyed by a bumper harvest.

However, industry officials who spoke to Standardbusiness last week said the economy was in the intensive care and in dire need of support.

Association for Business in Zimbabwe (Abuz) CEO Victor Nyoni said the companies that had remained operational were facing a going concern threat due to the inability to make foreign payments for their raw materials.

“For businesses said to be on the ‘priority list’, it takes banks no less than two months to facilitate a foreign payment. This in our view as Abuz does not reflect an economy that is on the rebound,” he said.

Nyoni also revealed that the regulatory environment in the country was unfriendly, saying an Abuz member was facing collapse due to poorly-crafted regulations by the Ministry of Tourism working with the Ministry of Transport.

The member is a manufacturer of boats and has been in this business for over 30 years.

Through these ministries, Nyoni said the government had allowed tour operators to import second-hand boats duty-free to the detriment of the local manufacturers who still have to pay duty when importing raw materials used to manufacturer boats locally.

“What is even sad is that these second-hand boats are said to be of questionable quality,” he said.

“I am reliably told that the second-hand boats currently being imported run on none engine, meaning should that engine develop a fault, there is the risk of sinking tourists in the water.

“Does this country have to wait for such an embarrassment before it cleans up this sector?” he said.

In the labour sector, things are bad, with Zimbabwe Congress of Trade Unions secretary-general, Japhet Moyo indicating that more than 2 000 workers lost their jobs between January and June this year.

“We are not doing fairly well as a country economically, politically and socially.

“Economically, if you look at the people in the streets, the number is increasing on a daily basis and the number of closed companies is also increasing,” Moyo said.

“We have got currency issues. This shows that the economy is not on a rebound but in fact we are going down.

“We are continuously hearing about retrenchment of workers every day and every month.

“From January to June this year, 163 companies applied for retrenchment and 2 112 workers were affected. The number might be higher than this.”

Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter president, Joseph Gunda said while the economy was showing signs of rebound, there were challenges that still existed.

Some of the constraints include shortage of cash, inadequate foreign currency for manufacturing companies to import the much-needed raw materials and the continued influx of cheap imported products that are manufactured locally.

“In this regard, we advocate the full implementation of all introduced Statutory Instruments (SI), which are SI 138 of 2007, SI 126 of 2014 and SI 64 of 2016,” Gunda said.

“We also call for the inclusion of other products not on SI 64 which we manufacture locally but are still being imported.”

He said government’s confidence with business member organisation such as CZI was growing, with a lot of their members having been tasked to spearhead some of government’s policy initiatives.

The initiatives include Special Economic Zone for Bulawayo, Rapid Results Initiative, increased local procurement through mining linkages and local content regulations — all aimed at improving the economy.

Gunda said as an organisation, they benchmarked themselves and interact with other regional and international industry groups.

CZI president, Sifelani Jabangwe, said even though the economy was suffocating, there were some positives that have been brought about by SI 64 of 2016.

He said following the introduction of the instrument, companies in the furniture sector had registered a 15% increase in the demand of flush doors while those that manufacture mattresses and bedding products had registered a 35% increase in the demand for products.

There has been an increase in capacity utilisation in some sectors such as yeast industry, which was almost closed and is now at 90%; biscuit manufacturing has gone up from 35% to around 75%; furniture sector improved capacity from 45% to 70%; detergent industry has moved from around 30% to 60%; tyre manufacturers have increased their capacity utilisation from 30% to 50%.

The pharmaceutical sector witnessed a growth from 30% to around 60%, he said.

“Some companies are taking advantage of the policy space and upgrading their machines and equipment. Investing in new technology will improve their production efficiency and their products will compete with imports,” Jabangwe said.

He said an opportunity had been opened for small-scale traders and cross-border traders to import raw materials to supply the companies.

However, Nyoni said the Zimbabwe Revenue Authority (Zimra) was also not helping the situation.

He said most businesses paid value-added-tax on the 25th of the following the month of invoicing.

“Any delays automatically attract interests and penalties. Our members tell us that the average debtors’ day is 120 days. This means it takes companies an average of 120 days to receive payment from its customers,” he said.

“But Zimra demand payment within 30 days after which companies are subjected to penalties and interests.

“We now have a situation where businesses have to borrow to finance tax obligations.” – The Standard