THE outlook for industry in Bulawayo is bleak with more companies expected to shut down next year after the government failed to set aside money to recapitalise distressed firms, analysts have warned. GAMMA MUDARIKIRI OWN CORRESPONDENT
Industry in Bulawayo is in distress also due to shortage of working capital, antiquated machinery, erratic power supplies among many other challenges.
“Industry’s performance will be slow at the beginning of the year largely due to shortage of working capital, among other challenges,” said prominent economic commentator Eric Bloch.
“But we are likely to see a slight recovery mid-year as there is potential for investment in the country which will aid the recovery of the industry.”
Bulawayo companies need an estimated $400 million to recover after at least 100 companies shut down last year and more could fail to reopen following the 2013 annual shutdown.
Companies had been pushing for the revival of the now-defunct Distressed Industries and Marginalised Areas Fund in the 2014 national budget.
Confederation of Zimbabwe Industries (CZI) Bulawayo chapter president Cletus Moyo said capital constraints and other challenges were likely to peg back performance of industry.
“Frankly, the outlook of industry in the short term is bleak,” he said.
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Performance of industry has also been suppressed by an increase in cheap imports.
Finance minister Patrick Chinamasa in his budget statement early this month, said imports continued to grow faster than exports.
Imports totalled $6,6 billion by October 2013, against $6,1 billion spent during the same period in 2012.
Chinamasa said total imports for 2013 were expected to reach $7,7 billion, while in 2014 they are projected to reach $8,3 billion which analysts say would hamper economic recovery.
Since 2009, the import bill has been higher than the export bill as the country has not been producing many goods due to the low performance of the manufacturing sector.
According to the CZI, industry’s capacity utilisation this year plunged to 39,6% from 44%.
