The state-owned Cold Storage Company (CSC) says the government is stalling its 80-million dollar capitalization plans as the Zimbabwe Confederation of Zimbabwe Industries expresses concern over policy inconsistencies in the southern African nation, which it believes are discouraging foreign direct investment.
Chief Executive officer of the Bulawayo headquartered beef processing company, Ngoni Chinogaramombe, told parliament’s Agriculture Committee, that the capitalization plan submitted two years ago has not been approved pending a forensic audit as required by the government.
The revival plans include the offloading of assets such as excess idle industrial land to raise $8.5 million that would be ploughed back into business to buy cattle for direct slaughter and restocking.
Chinogaramombe said part of the company’s efforts to recapitalize were jeopardized by government in 2008 when a negotiated $57 million joint venture deal with an Indonesian company, P. T Royal Ostrindo, collapsed after it took too long to be approved.
CSC is one of the many parastatals that are struggling due to lack of financial support and poor state management. The liberalization of the beef and livestock industry, a couple of years ago, resulted in the company facing stiff competition from private entities that now dominate the sector countrywide.
The testimony by CSC came at a time when CZI deputy president, Sifelani Javangwe, was also testifying before parliament’s Industry Committee.
Javangwe told the committee that the country’s investment environment remains unfriendly, forcing a large number of companies to shut down due to the high risk of doing business in Zimbabwe.
Some foreign investors are worried about the country’s black empowerment program, which compels international companies operating in Zimbabwe to transfer majority stakes to local people.
Jabavangwe said the harsh investment environment in the country is worsened by stringent labor laws and high bank interest rates, which are making it difficult for local industries to compete with cheap imports.
The CZI said it was worrying that government as the major consumer of products is buying goods from other nations instead of supporting local industries.
To remedy the situation, CZI suggested that the government should start purchasing local goods, review tough labor laws and ban second-hand clothes that have crippled Zimbabwe’s clothing industry.
Independent economist, James Johwa, said local industries require huge capital injections in order to retool and be able to compete on the international market.
Speaking at a consultative meeting on the re-alignment of laws at the weekend, Speaker of Parliament, Jacob Mudenda, said Zimbabwe’s archaic laws are discouraging investment in the country.
Mudenda said it was imperative for Zimbabwe to urgently realign the country’s investment laws so that they are adaptable to the current trends.
He added that it would be difficult for investors to come to Zimbabwe where they have to wait for more than 80 days for their investments to be approved when Rwanda approves investments in 24 hours while China takes about three days.