via ‘Zim requires $22bn stimulus package’ December 9, 2013 by Victoria Mtomba
ZIMBABWE requires a $22 billion stimulus package from international capital markets to ignite economic growth on the back of massive company closures and intense competition from regional peers, a local expert has said
Judicial manager Cecil Madondo said firms, which have been seeking capital since the introduction of multiple currencies in 2009, immediately require fresh capital which can be sourced from international capital markets.
Judicial management is a court supervised procedure designed to give the debtor a temporary respite from the claims of creditors, during which time a court-appointed manager investigates the debtor’s affairs, clarifies its debt, and attempts to restructure the company and the claims against it so that it can revert to being profitable.
Presenting a paper titled Enhancing Zimbabwe’s regime for resolving corporate financial distress: Current challenges and possible solutions, Madondo said out of the stimulus package, $10 billion would retire the country’s external debt, while the balance would be given to financial institutions.
“The balance of $12 billion should be seated with local banks and the Reserve Bank of Zimbabwe should be capacitated and viable projects should be initiated by government,” he said.
Madondo said government should take a look at the outdated legislation and statutes and create employment for the citizens.
“Some countries have surplus cash. As a country, we should be in a position to approach them to pay the old debt so that we will get access to cash and produce our own goods not to be a warehouse as is the case now,” he said.
Madondo said presidential powers should be used to suspend or revise statutes such as labour and the indigenisation law. Experts say the country’s labour laws are skeweed in favour of employees, sometimes leaving companies in dire strait when workers are compensated. The empowerment law which compels foreign-owned companies to sell 51% stakes to locals has been criticised for scaring foreign direct investment inflows.
Meanwhile, Madondo said due to liquidity constraints on the market, judicial managers continued to face funding challenges.
Madondo said before the multi-currency system, it was easy to access funding from suppliers and financial institution, but under this environment it has become difficult.
He added that there is a board that represents judicial managers, but it has no financing to fund the secretariat or run an office.
Madondo said he had recorded a 20% failure rate in managing companies under transition due to the reluctance by some shareholders to give autonomy to the judicial manager.
COMMENTS
Readers. The editor deleted my comments. I think he fears charamba moyo. Shame on him
When the Rhodesians built this economy did they ask anybody for millions/billions? What caused the economy to fail? What makes you think the economy will grow after the 22 billion injection? Please go to an old peoples home, and let those who know run the country….
Madondo living in cloud cuckoo land. “Some countries have surplus cash” why on earth would they give it to Zimbabwe? The reason that they have surplus cash is that they have managed their resources wisely. The quickest way to see their “surplus cash” reduced to “cash shortage” and then disappear entirely is to give it to Mugabe and his generals to play with.
ReaLly which international institutions would give a company in Zimbabwe so much money. After the company might be taken by the government the following day!
Spare us nonsense .You are saying ownership takeover will not stop, so take the foreign owned companies and stop the nonsense.You are really stupid to think any one will hear your pleas.Where are the Chinese you said are your friends?Go to the Chinese and stop crying, go now.
Zimbabwe doesn’t “require” anything. Zimbabwe needs to play by the rule of law and not chase foreign investors away with the threat of state-sponsored theft of assets and plenty of investors will come here of their own accord. The time for handouts is over.