Posted on 12/04/2002 7:14:34 PM PST by Clive
AT least half of Zimbabwe’s manufacturing, agro-industrial and mining companies plan to shut down for the first quarter of 2003 to mull survival strategies in an increasingly hostile operating environment, risking at least 370,000 jobs, the Financial Gazette has established.
Most of Zimbabwe’s firms will shut down in the next few weeks for the Christmas holidays and would normally have re-opened in January next year.
But industrialists this week said at least half of the country’s companies were planning to remain closed until the end of March, or until there was some resolution of Zimbabwe’s economic crisis.
They said representatives of the country’s key economic sectors had already held consultations and decided to remain closed for the first quarter of next year while they decided how to proceed.
Companies are expected to advise workers of the lengthy shutdown in a week, unless developments convince them to adopt a different strategy. The firms are said to be already working on retrenchment proposals for staff.
"We are busy discussing with the authorities right now so that we can come up with rational solutions to the economic problems that have affected the operations of industry," Confederation of Zimbabwe Industries president Anthony Mandiwanza told the Financial Gazette.
Mandiwanza, whose organisation represents most of the country’s industries, added:
"That solution has to be found before the end of the year as most companies are in the process of reviewing their operations in the new year because of viability problems.
"If companies opt for an extended closing period as they assess how to survive, it will be a disaster. What will we do with labour? We just have to find the solution now."
Statistics obtained from industrialists this week show that Zimbabwe’s manufacturing industry employs about 180,000 workers, mining at least 40,000 and agro-industry an estimated 350,000.
The industrialists said in the manufacturing sector, about 100,000 jobs could be affected by the prolonged closure of companies while 20,000 and 250,000 workers could be affected in mining and agro-industry respectively.
"If the situation remains as it is, we are closing shop for the first quarter and downsizing operations if we are to resume," one industrialist told the Financial Gazette.
Zimbabwe’s service industries, which employ millions of people, could also be adversely affected by the proposed closures, further straining an already battered economy.
The country’s economy is expected to shrink by seven percent next year compared to11 percent in 2002 and companies have been hard hit by soaring inflation of 144.2 percent and worsening fuel and foreign currency shortages.
A blanket freeze on prices and tough new exchange control measures introduced by the government last month are also expected to worsen the situation.
Exporters are now required to remit 50 percent of their earnings to the Reserve Bank of Zimbabwe, with the remainder also being lodged with the central bank for use within 60 days.
The government has also banned foreign exchange bureaus, accusing them of operating a parallel market for hard currency.
Before the new policies, companies had to submit 40 percent of their proceeds to the Reserve Bank and could exchange the remaining 60 percent on the parallel market for hard cash at rates more lucrative than those prevailing on the official market.
This enabled most firms to remain viable.
The Dimensional Stone Producers’ Association, which represents granite mining companies in Mutoko, has advised the Chamber of Mines, the central bank and the Ministry of Mines that the new measures will result in the collapse of their industry.
The granite miners employ more than 3,000 workers.
"Based on this current situation, our entire industry will face collapse within a period of two weeks should an immediate solution not be found," the association said in a letter highlighting its concerns.
The Zimbabwe Mining and Smelting Company has also informed the Ministry of Mines, the Reserve Bank and the Chamber of Mines that because of the new policy, it will no longer be able to borrow to survive.
A meeting is expected next week between the central bank, the Ministry of Finance and the mining industry to avert mine closures.
Mandiwanza said the government had to review its exchange rate policy as well as the price freeze, which he said were undermining the viability of local companies.
Economic consultant John Robertson echoed the CZI president’s sentiments, saying the government had to come up with new policies.
He said: " What is needed is the lifting of price controls and new policies to deal with the exchange rate. Unless those are addressed, industry will close shop because it will not be viable for it to continue operating."
He said the prolonged closure of industry in the new year would cripple the economy and result in the loss of billions of dollars.
Macro-Economists will use it as a study of the interactions and inter-dependencies between the agrarian sector and the rest of the economy and of the consequences of massive intervention in the market.
Among the many great things about beer, is how it's such a universal beverage, with perfectly decent brews coming out of some of the least likely places.
- Frank Zappa
They weren't poor when they were allowed to own and run their farms.
Or maybe of what used to be Zimbabwe. It sure looks like Mugabe is determined to raze it to the ground. This death spiral has been horrifying to follow and nobody seems to care.
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