HomeBusiness DigestThreats against foreign-owned firms to derail recovery

Threats against foreign-owned firms to derail recovery

Nqobile Bhebhe/Taurai Mangudhla

“CARELESS” statements by politicians will derail the country’s economic recovery pace economists said this week.

Zimbabwe Defence Minister Emmerson Mnangagwa last week threatened to seize foreign owned companies’ shareholding unless they urgently denounce sanctions  which he said were put in place by Western countries.
Mnangagwa said companies’ bosses will soon be summoned to appear on national radio and denounce Western sanctions failure of which they will lose 90% of their shareholding.
“We will ask them if they support sanctions or not. Those who indicate that they do not support sanctions will be asked to go live on national radio and tell the nation and the rest of the world their company does not support sanctions,” Mnangagwa was quoted saying.
He said that authorities were already “in the process of rounding up” the bosses of foreign businesses who are still operating in the country. Another report on Sunday stated that the money raised from the 90% would go to Mugabe.
Economist Eric Bloch told businessdigest on Tuesday that local banks relied on international lines of credit from their foreign partners who were closely monitoring developments in the country.
“Local banks’ international partners are not willing to release funds as they are still not convinced by political developments,” said Bloch.
Bloch said with limited free funds local financial institutions would continue availing short term credit which have a significant contribution to revival.
US$3 billion was needed to revive the country’s industries, but several factors were militating against growth.
“Although an in-depth study on the exact amount needed to revive industries has not been done, estimates put the figure between US$2-3 billion,” he said.
“However, at present it’s impossible to raise such an amount due to the unstable political situation” said Bloch.
He said renewed threats of grabbing a 90% sharing from foreign companies would only serve to scare would-be lenders.
Addressing a media briefing on Tuesday this week Indigenisation and Empowerment minister Saviour Kasukuwere supported Mnagagwa saying: “Mnangagwa’s statement is consistent with the indigenisation drive and the country’s desire to fight sanctions”.
“We have been under colonialism for a very long time and we need a sustainable structure,” Kasukuwere said.
Kasukuwere however said government did not have a “grab-all mentality” and people should have equal opportunities.
“I am not aware of any big fish who has benefited from the indigenisation exercise…We want to address racial imbalances,” he said.
Zimbabwe National Chamber of Commerce  economist Kipson Gundani is of the view that low funding could characterise the year with political uncertainty being the major risk factor.
“There could be slight improvement with regards to funding of industries. Long term funding through local financial institutions would remain depressed as long as  the political side is not clear. Banks would continue catering for shorter loans which in the long run would mean insignificant changes to industry” said Gundani.
Industry minister Welshman Ncube on Tuesday said his ministry was working on curbing obstacles that inhibit companies from achieving full growth in capacity utilisation

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