TUESDAY, OCTOBER 29, 2013 —
As government seeks to bolster the country’s flagging industrial sector, the Zimbabwe National Chamber of Commerce (ZNCC) Tuesday told Parliament that government should support viable companies and not try to revive collapsed firms.
Briefing the National Assembly’s Industry and Commerce portfolio committee on the state of industry in Zimbabwe, ZNCC’s macroeconomic committee chairman Brains Muchemwa said most companies that collapsed due to mismanagement should not be rescued.
Muchemwa said government financing for these companies would simply go to paying their mounting losses.
ZNCC president Hlanganiso Matangaidze argued it may be more expensive to resuscitate a distressed company, citing the state-owned Cold Storage Company, which he said needs US$19 million to resume operations. More than 84 percent of that amount, or about US$16 million, is outstanding debt that would first have to be repaid.
A US$40 million fund set up by the former inclusive government to help distressed companies, the Distressed Industries and Marginalized Areas Fund (DIMAF), made little impact, analysts say, due to the government’s strict requirements for accessing the fund.
Muchemwa said industries in Zimbabwe face stiff competition from cheap imports and there is need for government to protect local industry in order to create jobs.
Muchemwa said other factors affecting local industry is a lack of access to finance, high interest rates, dilapidated infrastructure, and the high cost of economic enablers such as water and electricity.
All this, he said, results in high production costs, making local products uncompetitive compared with those from the Southern African Development Community region.
Muchemwa also said investors have no confidence in Zimbabwe, as the country has a reputation for not respecting property rights. He said the controversial black economic empowerment law has only worsened the situation.
He suggested that if government gave title deeds to new landowners, it might boost confidence.
Masvingo urban lawmaker Daniel Shumba echoed Muchemwa’s sentiments, saying confidence building is critical if Zimbabwe is to rebuild its industries.
Industry and Commerce portfolio committee chairperson Ray Kaukonde said it is the responsibility of very Zimbabwean to help revive the economy.
Economist Eric Block told VOA's Sithandekile Mhlanga that although the Zimbabwe National Chamber of Commerce has a valid point on focusing on already functional companies, the government should revive collapsed companies to promote economic growth.