Companies continue shutting down

Economists, industrialists and labour experts are warning of a troubled 2014 for Zimbabwe as many companies are slipping into liquidation or judicial management, throwing thousands of workers out of the job market and invariably pushing the unemployment rate close to 90 percent. Finance Minister Patrick Chinamasa, who projected an optimistic 6.1 percent growth rate next year, has also admitted that the economy is "saddled with severe socio-economic problems including a fragile treasury, erratic power supplies and lack of clarity over the country’s black empowerment law.”

According to the Master of the High Court’s roll, scores of companies are each month applying for judicial management, liquidation and voluntary closure as provided for by the Companies Act. The act provides that a company may be placed under judicial management if it is unable to clear its debts or when it is likely to collapse. The Master of the High Court’s roll shows that some of the affected companies from across all economic sectors include Zimbao Mining Ventures, Infinity Asset Management, Rusape Service Station, Central African Shipping Agencies and United Methodist Publications and Stationers Foundations.

Others are ambulance service provider Mars Zimbabwe (Pvt) Ltd, Road Construction company, Gulliver Consolidated, multi-industrial concern Phoenix Consolidated Industries, KM Financial Holdings and several holding firms such as Apex holdings and Shaefur investments. Big companies that have retrenched staff include Zimplats, Unki, Bindura Nickel, Mimosa, Spar Supermarkets, Dairiboard, Cairns Foods, Olivine Industries and PG Industries. Zimbabwe has been hit by a severe liquidity crunch that has forced industries to operate far below capacity. A partner at Deloitte & Touche, Tapiwa Chizana who is involved in business rescue and judicial management, said many companies are struggling to survive.

Zimbabwe's economic growth rate which others say is effectively recovering has confounded critics over the last three years. It is not recovering but continues to go down. A report released by American think tank, the Cato Institute, says the country's GDP grew at an impressive average of 7,3% per annum between 2009 and 2011, far outpacing the growth registered by Hong Kong (5%) in the same period. However, Zimbabwe's economic metrics masks a grim reality that the country is poorer now than it was at Independence in 1980. The local currency is now defunct and infrastructure is decaying every year. Water supply systems and other utility services have virtually collapsed, with numerous studies showing that Harare's water is contaminated by human waste and industrial effluent. While evidence on the ground shows Zimbabwe's economy has since 1980 grown in unstable fits and starts, various schools of thoughts abound as to the causes of the economic meltdown, especially between 1998 and 2008.

Zanu PF blames Western sanctions for the virtual economic and social collapse of the country, but critics point to the party's suicidal economic policies and corruption entrenched in its politics of patronage. Critics also say the unplanned payment of Z$50 000 (old Zimdollar) lump sum gratuities to war veterans in 1997 sapped Treasury while the fast track land reform programme of 2000 rocked foundations of the economy, scared away donors and potential investors.