THE Confederation of Zimbabwe Industries (CZI) has warned Zimbabweans to expect more company closures because of the worsening economic environment amid revelations more than 5 000 workers were retrenched last year as firms battled to stay afloat.
According to the CZI, the Purchasing Managers Index stood at 48% in 2014, signalling there was no respite to the economic decline.
What is shocking is the deafening silence from President Robert Mugabe and his Zanu PF administration regarding how they plan to rescue the economy at a time most people are surviving on less than a dollar a day.
Mega-leaders paraded in the State media appear not to have done anything to resuscitate the economy as it emerges the Mugabe administration is technically broke and has been since his controversial elections in July 31 2013.
According to MDC-T spokesman Obert Gutu, the Zanu PF administration is totally broke and won’t last the next 180 days.
Critics of Mugabe and Zanu PF don’t see any immediate solution to the economic crisis as long as Mugabe reigns. Only a post-Mugabe political dispensation can bring the kind of political change that’s required for the economy to start working again, they argue.
But that post-Mugabe leadership will have to make a radical shift in order to generate the kind of confidence required to reboot the economy. The CZI warning is not a surprise that fresh and more company closures are coming.
If you have a liquidity crunch, a banking sector that is not functioning properly and can’t extend loans to businesses, coupled with lack of clarity on policies to do with property ownership and security of ownership of companies by outside investors, a sovereign debt of over $10 billion, one of the worst corrupt countries in the world, laws that make it difficult to register or expand businesses, and a lot of political risk with a malfunctioning government and confusion within the government and lawlessness, then you don’t need to be an economist or development specialist to see that companies will continue closing down.
Zimbabwe has just all the right ingredients for company closures. You have high unemployment and underemployment levels with the majority of the people hardly making a living and this causes a depression of the market for most goods leading to companies failing to make right levels of profits they need to break even.