via No revival for dead Byo firms, minister 01 October 2014
SOME of the companies that closed down in Zimbabwe’s former manufacturing hub of Bulawayo in recent times will not be revived due to capital constraints, industry minister, Mike Bimha said on Wednesday.
More than 100 companies are estimated to have closed or relocated from Bulawayo in the past three years, leaving nearly 20,000 employees out of work while over 10 Bulawayo companies were either liquidated or placed under judicial management between January and June this year.
“It’s government’s objective to resuscitate industry in this country not only in Bulawayo but in so doing we can’t resuscitate everybody,” Bimha told a World Bank Doing Business meeting.
“There are others who have died who should probably remain dead and there some which we should resuscitate first. That is the challenge that government and the private sector have to face.”
In January, the Bulawayo City Council announced a cocktail of incentives to ease the burden on the city’s struggling industries, among them a once-off 50 percent discount on amounts owed if the arrears were settled before June 30, saving the industry $1,2 million.
It also relaxed its intensive water rationing schedule – seen as the most detrimental to investment – and waived penalties and interest rates on accounts owing.
Bimha also said that the manufacturing sector could also be operating at lower than 30 percent of capacity due to shortages of capital, echoing Confederation of Zimbabwe Industries (CZI) estimates in June.
“Ladies and gentlemen, key to note in our discussions is the low capacity utilisation and productivity level, estimated at 30 percent in June by CZI, and this could be worse than the reported levels,” Bimha said.
He said Zimbabwe should implement more reforms to attract increased foreign direct investment (FDI). Official figures show that the country received $67 million in FDI in the first six months of the year compared to $165 million over the same period last year.
“We need to be attractive, we need to have those features that make us attractive. I realise that a lot of work has been done in this area but we don’t seem to get our act together and I think that is the challenge that we have.”