Industry budget dubbed ‘paltry’

via Industry budget dubbed ‘paltry’ – DailyNews Live by Mugove Tafirenyika  6 JANUARY 2014

Industry minister Mike Bimha says the $7,3 million allocated to his ministry in the $4,2 billion national budget is insufficient to resuscitate the country’s ailing industries.

In an interview with the Daily News last week, Bimha admitted that there was little prospect of change in industries’ operational environment since the factors that had resulted in the current depressed atmosphere were still unresolved.

He said the 2014 allocation only catered for the day-to-day running of the ministry.

“We do not consider our allocation from the national budget as meant to resuscitate industry as it is too little for the job,” Bimha said.

“The amount given to us can only go as far as making sure that the ministry remains operational so we will have to look for funding from local, regional and international sources if we are to avoid more industries closing.”

Many companies are reeling from a combination of factors, including sustained power cuts, water rationing and capital constraints.

Bimha said Zimbabwe needs at least $10 billion to revive its distressed manufacturing sector.

The sector, which had stabilised from a decade-long recession following the formation a coalition government in 2009, is now showing signs of strain with capacity utilisation hitting new lows.

According to the Confederation of Zimbabwe Industries’ (CZI) manufacturing sector survey report for 2013, capacity utilisation in the sector plunged to 39,6 percent from 44 percent in 2012.

The survey also showed that for local manufacturers, competitiveness was diminishing.

Bimha admitted that the country’s industries were generally in the intensive care unit and in need of help.

He said capital constraints continue to hamper revival of the industrial sector, as the country remained ostracised from accessing lines of credit from the World Bank and International Monetary Fund.

“We plan to mobilise funds for the resuscitation of all sectors of our economy from local, regional and international sources to help the situation,” he said.

“As it stands, it is possible that some companies will close if we do not act given that nothing has really changed from last year.”

Economists, industrialist and labour experts have warned that 2014 will be a tumultuous year for the country’s industries with more companies sliding into liquidation, resulting in job losses.

While government has projected an optimistic 6,1 percent growth rate this year, it is becoming increasingly clear that the target will most likely be missed as the economy is saddled with severe socio-economic challenges.

The Master of the High Court’s roll reveals that scores of companies are applying for judicial management, voluntary closure and liquidation as provided for by the Companies Act.

Some of the companies that have been affected across all sectors of the economy include Infinity Asset Management, Medical Air Rescue Services (Pvt) Ltd (Mars), Phoenix Consolidated Industries, KM Financial Holdings among others.

Zimbabwe’s industry — still suffering from the hangover of a decade-long economic crisis — has been bleeding due to cheap Chinese imports since 2009 when government liberalised the economy, according to economists.

Nearly 100 companies have closed down in the country’s second capital city Bulawayo since 2010, putting out of work an estimated 20 000 workers, with the remaining companies scaling down their operations or relocating to Harare.