GWERU – More than 300 companies in Bulawayo and the Midlands applied for liquidation last year alone as the operating environment continues to worsen, records from the Bulawayo High Court have shown.
Zimbabwe’s economy is stuttering in the aftermath of a disputed election in July that extended President Robert Mugabe’s 33-year-rule and is in desperate need for capital with some estimates putting domestic credit demand at $12 billion, more than double total bank deposits.
It is also facing challenges such as erratic power supplies, liquidity constraints, depressed industrial capacity, while industry is battling high financing costs and demand for higher wages from restless workers.
Officially opening the High Court circuit in Gweru on Monday, Justice Maxwell Takuva said the harsh environment was forcing most companies to close.
“Many enterprises are struggling to survive due to the harsh macroeconomic environment, consequently, most of them are opting for judicial management,” he said.
Companies that have been placed under judicial management continue to face numerous challenges ranging from under-capitalisation, mismanagement and high levels of indebtedness.
Takuva said that firms were now using the provision for judicial management to avoid paying their debts, which had left many workers without jobs.
“This option can be an unruly horse if not managed properly, there is need for closer supervision by the master office in order to curb possible abuse resulting in prejudice to creditors,” he said.