Zimbabwean Manufacturers Bemoan Cash Crunch

Harare – Zimbabwean manufacturers want a speedy resolution to the payment backlogs and the costing structure of the business environment that has crippled companies and businesses.

A dollar crunch has worsened the liquidity situation in Zimbabwe and Busisa Moyo, president of the CZI said on Wednesday afternoon that companies were facing procurement and supply problems as a result of this.

“Companies are unable to supply products and to procure goods for production,” Moyo said.

The industry grouping is engaging the government at an indaba on January 26 in Harare to “come up with solutions that will improve the country’s liquidity situation, and eliminate the external payments gridlocks”.

The CZI still wants the government to adopt the rand for usage in Zimbabwe, which currently uses a basket of multiple currencies. Owing to shortages of US$ notes last year, the government introduced local bond notes, now worth about $73m in circulation.

“The biggest impediment to exports is high costs. It costs more to produce from Zimbabwe and we have – as business and government – to address the cost competitiveness of the economy,” Moyo added.

The CZI is exploring measures to grow export markets for Zimbabwean producers. President Robert Mugabe’s government is giving a 5% incentive on export receipts to Zimbabwean producers and the CZI believes that there is “need to grow value added exports” and tap into export incentives.

Zimbabwe has been facing foreign currency shortages to pay for fuel, electricity and other requirements. The country mainly gets its foreign currency from mineral sales of gold, platinum and diamonds and from tobacco exports.

As a result of crippled export receipts, the country has faced power outages while fuel stocks are hardly sufficient.

The country is also having to import maize to offset food shortages of the past two years, with exporting companies required to keep only about 50% of their receipts in hard cash which is hardly available at the banks.

“The government is simply allocating what is there (foreign currency). Companies could close and we could end up with a dire situation,” Moyo said.

Companies in the country are also having to deal with import restrictions on several products that the government says should be manufactured locally.

According to the CZI most corporates are applying for shorter working hours to lower labour costs while others are having to retrench workers in a bid to remain afloat.

Source: Zimbabwean manufacturers bemoan cash crunch | Fin24

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