Business hopes against hope

Source: Business hopes against hope | The Financial Gazette November 10, 2016

THE year 2016 will go down in Zimbabwe’s history as one of the worst in recent memory, captains of industries reasoned this week.
As curtains come down on 2016, companies have struggled to survive the economic turmoil, amid a vicious liquidity crunch.
A significant number of them have either closed shop, retrenched or scaled down operations.
Many more have withheld fresh investment.
The year is ending with new complications for industry and commerce.
Fuel dealers — a key segment of the economy — are rejecting plastic money and other mobile payment platforms, preferring cash payments.
This is despite spirited efforts by the Reserve Bank of Zimbabwe calling on businesses to roll out point of sale (PoS) machines in their outlets to make life easier for the transacting public in the wake of the cash shortages.
Some fuel dealers are now demanding that their customers pay a portion of their bills in cash, while the rest is wired electronically.
A snap survey by the Financial Gazette showed that some service stations are accepting as little as US$20 worth of fuel purchase through the PoS platform, while some have set US$80 as the daily limit.
Uncertainty has gripped the fuel industry, as dealers fear that they may not be able to access their monies once the bond notes are released onto the market.
Fuel dealers are demanding cash due to depleting nostros that have resulted in delays in payments to suppliers.
Demanding cash upfront would also aid them in facilitating the importation of fuel where suppliers deal on a cash basis.
Confederation of Zimbabwe Industries (CZI) president, Busisa Moyo, said most companies have been through a lot of challenges this year with many of them scaling down operations to keep their heads above water.
“Companies are struggling to pay tax and other payments, so most of them have resorted to operating at a small scale in order to cut costs …This is how bad the business environment has been for most companies this year,” he said.
CZI’s 2015 Manufacturing Sector Survey report highlighted that capacity utilisation in industry had declined by 2,2 percentage points to 34,3 percent from about 36,5 percent.
Moyo said even though industry is under immense pressure, capacity utilisation could rise in the coming year.
The Zimbabwe Revenue Authority’s 2016 first quarter report noted that most companies were struggling to pay their taxes resulting in revenue mobilisation failing to meet its targets.
The tax debt has risen 30,9 percent from US$1,97 billion at the end of 2015 to US$2,58 billion by the end of the first quarter (2016).
Zimbabwe National Chamber of Commerce chief executive officer, Christopher Mugaga, said although the economy was evidently going through “troubled waters”, they expect companies to re-open next year after the festive season.
He urged companies to take advantage of Statutory Instrument (SI) 64 of 2016, which restricts imports of selected products that can be manufactured by local companies.
“Nothing will stop companies from opening after the festive season; the introduction of SI 64 of 2016 could be an opportunity for most companies to rise (to the occasion) and improve capacity utilisation,” he said.