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Byo firms in meltdown

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BULAWAYO — A total of 10 Bulawayo companies have either been liquidated or placed under judicial management between January and June this year, compounding the former manufacturing hub’s woes as the country’s economy continues its marked slowdown, according to information obtained from the Bulawayo High Court.

Details obtained from the Bulawayo High Court shows that three companies, Lasker Brothers (Pvt) Ltd, makers of the Archer brand of shirts, Trade Power (Pvt) (Ltd) and Wenbrough were put under liquidation after they have failed to pay debtors and workers millions of dollars.

Lasker Brothers owe workers and creditors an amount of $6 559 million, while Trade Power owes $3,5 million.

The report also indicates that Chakata Resources Zimbabwe (Pvt) Ltd, Tagarira Brothers (Pvt) Ltd, Setsail Equipment, Observant Enterprises, Hadad Enterprises, Willsgrove and Savanna Wood (Pvt) Ltd have been placed under judicial management during the period under review.

Economic analysts and business lobby groups contacted for comment said the situation was exacerbated by a serious liquidity crunch afflicting the economy, high cost of utilities as well as aggressive taxation by a dollar-hungry government.

“It’s a national problem because the economy is weak and in a bad state.

“If the situation is not being addressed we would witness a lot of these company closures,” economic commentator Eric Bloch said.

Affirmative Action Group vice-president Sam Ncube said government should consider a moratorium on liquidation.

“As a group we have been calling for a moratorium because liquidation will kill our economy.

“Everyone in Zimbabwe owes one way or the other and liquidation is not the answer,” Ncube said.

With the manufacturing sector in particular struggling, some economists have called on the government to provide a stimulus package for firms, through concessional funding, among other export incentives.

Economist Willia Bonyongwe, who chairs the Securities and Exchange Commission of Zimbabwe, said the government should also play an active role in extending credit to productive sectors, saying the current arrangement of extending credit through commercial banks is costly for business.

She said the horticulture sector, whose revenue peaked $499 million in 1999 before plunging to $40 million last year, could be a “low-hanging fruit” that can quickly improve foreign currency inflows and create more employment.

“We need to create employment and generate employment because of our huge trade imbalance,” Bonyongwe said.

“Government, through the Reserve Bank of Zimbabwe, should take a leading role in extending concessional funding to exporters.

“There should be incentives for exporters such as lowering interest rates for them.”

Before 2009, the government ran a series of export incentive programmes – including concessional funding through the central bank, but these were often abused and deemed ineffective.

The central bank ran up a debt exceeding $1 billion as it pursued quasi-fiscal operations, which have now been discontinued.

Banks are currently charging up to 20% interest, making it costly for most farmers to develop critical infrastructure such as irrigation, Bonyongwe said.

– The Source

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