Zim industries face shutdown over foreign currency crisis
Unless laws are urgently changed most manufacturers won’t be able to pay for the raw materials they need by February
Harare — Zimbabwe’s apex organisation for industries has warned that most of the country’s manufacturers could shut down by month end if the government does not adopt urgent measures to solve the country’s currency crisis.
The troubled southern African country is facing its worst economic crisis in 10 years as a result of a critical shortage of foreign currency to import raw materials for its industries.
Manufacturers say they owe payments of over $480m as at the end of 2018.
President of the Confederation of Zimbabwe Industries (CZI) Sifelani Jabangwe told journalists at the Confederation of Zimbabwe Retailers breakfast meeting in Harare on Thursday that the country’s industries are in a quagmire.
“As indicated earlier, most of the companies do not have raw material supplies that go beyond January as most of our suppliers cut us out on stock and it is only payment that will unlock the supply lines. The reason is we are eating into our lead times for bringing in goods.
“Most of the companies have to pay in the next 10 to 14 days for the raw materials so that they do not close. If we start transacting after that time, closure will be inevitable because we need about two to three weeks at least for the goods to come in. Sometime in February a number of companies will close,” Jabangwe said.
He said the biggest challenge faced by industries was a shortage of foreign currency.
“Last year most of the companies lost between 70 to 80 days of business, which is something that we want to avoid. The biggest challenge is to do with foreign currency; as you recall by the end of 2018 there were policies that were put in to separate the electronic money and the USD nostros, but there is no mechanism between the two.”
Jabangwe said industries had received only 15% of their foreign currency requirements in the last quarter of 2018.
“We believe it’s a situation that can quickly be unlocked if the law that was put in place to criminalise the trade between bond note and the US dollar is removed. We are caught in a logjam and this has been our request to government to clear away the law or else avail currency but we all know that the government does not have much currency to provide such allocations,” Jabangwe said.
Industry and commerce minister Mangaliso Ndlovu was not available for comment as his mobile phone was unreachable while his deputy Raj Modi told Business Day that he would only be in a position to comment on Monday.
Last week, Ndlovu told our sister paper The Sunday Times that companies that sell in US dollars risk losing their licences.
In an interview with Business Day in Harare, economist Dr Gift Mugano said government needs to hold urgent dialogue with affected industries.
“It is a given that industry is facing enormous challenges in relation to foreign currency shortages. The two need to come together and find solutions. On one hand, companies should not threaten government that they will close unilaterally while on the other hand government should also listen to the concerns raised by industry and propose the best way forward,” he said.