700 Harare firms close

HOPES of a quick economic turnaround under the new Zanu PF government appear to be fading even faster as more and more companies close shop, throwing tens of thousands of workers onto the streets to join the teeming ranks of the unemployed estimated at above 88%.

Taurai Mangudhla/Elias Mambo

Information gathered by the Zimbabwe Independent this week revealed that scores of big companies that used to employ tens of thousands of workers are either on the verge of collapse or have closed down completely leaving workers stranded.

A July 2013 National Social Security Authority (Nssa) Harare Regional Employer Closures and Registrations Report for the period July 2011 to July 2013 shows 711 companies in Harare closed down, rendering 8 336 individuals jobless.

In addition, many companies are downsizing and have retrenched tens of thousands of their employees, condemning them to a gloomy future.

Major companies that have retrenched include platinum miners Zimplats and Unki, Bindura Nickel, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.

Zimbabwe Construction and Allied Trades Workers’ Union (ZCATWU) general secretary Nicholas Mazarura said their members have experienced intensifying problems since the beginning of this year with Zimplats and Implats platinum mines failing to pay their sub-contractors, resulting in the retrenchment of over 4 000 employees.

“Zimplats alone retrenched close to 2 500 employees in April,From
while four companies contracted by Implats in Unki have also retrenched workers citing non-payment of wages by Implats,” Mazarura said.

“We are experiencing hardships because hundreds of companies are closing shop claiming the liquidity crisis. At the moment, the construction industry is operating at less than 40% production countrywide,” he said.

According to the Nssa report, 330 companies in Harare in the retail and other business services category, closed while administration-related businesses also suffered a huge knock with 59 companies closing, with the construction and baking industry losing 42 and 32 companies respectively.

It also indicated that 47 companies shut down in the farming sector while 20 players went under in the printing industry. Zimbabwe’s agricultural sector has been struggling to recover from the impact of the 2000 fast-track land reform programme, which disrupted land ownership and tenure.

Despite much interest in Zimbabwe’s mining sector, seven companies closed in the extractive industry during the period under review, while nine companies went bust in the milling industry.

Millers have been hard hit by cheaper imports and a general lack of adequate grain and cereal supplies from local growers.

The health and transport sectors were not spared by the economic downturn with 18 players in health services and 16 in the transport sector closing down in the two years under review in Harare.

Apart from the company closures that claimed thousands of jobs, the country’s ailing economy has suffered serious knocks from the retrenchments.

Sources on the Zimbabwe Retrenchment Board, who spoke to the Independent on condition of anonymity, said the downward trend is continuing.

“The situation will persist in the foreseeable future because we are a consumer economy instead of a production-oriented economy,” said the source. “It’s even worse because we do not have foreign direct investment; so everyday companies are retrenching or liquidating.”

Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) executive director Gibson Chigumira was this week quoted as saying the synchronisation of government policy with investment decisions of the manufacturing sector is critical if the country is to become competitive in attracting investment and subsequently creating a positive cycle in the recovery of industry.

Zimbabwe has one of the most uncompetitive business environments and is ranked among the worst in terms of ease of doing business. The country also remains unattractive to international financing largely due to a huge external debt estimated at about US$11 billion. This has resulted in the unavailability of long-term cheap financing with the available short-term loans being expensive.

In a separate interview this week, Zimbabwe Congress of Trade Unions national co-ordinator Elijah Mutemeri said Zimbabwe is currently witnessing massive retrenchments as companies reel under the serious liquidity crunch.

“We are witnessing massive retrenchments this year more than ever and most companies are now using interns who are only given bus fares at the expense of full-time employees,” Mutemeri said.

“Over 1 300 workers at Bindura Nickel Mine were laid off although negotiations are going on with regards to their packages.”

Mutemeri also said companies like PG, Rainbow Towers and Spar have been retrenching countrywide since the beginning of this year.

“Spar is retrenching 40 workers per branch countrywide while at the hotels 75% of the employees are students,” he said.

Federation of Food and Allied Workers Union of Zimbabwe (FFWUZ) members have been hit hardest as thousands were left jobless in January this year.

“We have companies such as Dairibord Holdings which has retrenched the majority of its employees countrywide,” said Gift Maoneke, FFWUZ paralegal officer.

Maoneke said Cairns has been placed under judicial management with hundreds of its employees stranded at home and only being called when the need arises.

Other big-name companies retrenching include Colcom(which has closed its meat-processing department), Zimpack Food and TM supermarkets. The banking sector has also been dealt heavy blows by closures and retrenchments since 2009.

Zimbabwe Banks and Allied Workers’ Union (Zibawu) general secretary Shepard Ngandu said retrenchments in the banking sector are likely to continue.

“Interfin Bank is under unclear circumstances because it is under curatorship, while another bank (name supplied) is intending to retrench any time soon because they are not financially stable,” he said.

A July 2013 Employment Confederation of Zimbabwe report shows 1 100 individuals were retrenched in the first half of 2013 and were recorded at the Ministry of Labour and Social Welfare.

Olivine laid off 109 employees in the first quarter of 2013 and Interfin Bank retrenched 114 workers in the second quarter of 2013.

Dairibord has retrenched 92 workers, AfrAsia Kingdom Bank 52, and Rainbow Tourism Group 44. According to a Confederation of Zimbabwe Industries (CZI) 2013 Manufacturing Sector Survey, 14% of the respondents indicated they were downsizing and had retrenched permanent staff due a downturn in business.Lack of finance, policy inconsistencies, inadequate infrastructure, restrictive labour laws and government bureaucracy are the major hurdles for local business, according to the CZI. Government insists that most of the country’s debilitating economic problems have been wrought by economic sanctions imposed by the West on the country over a decade ago.

However critics put the blame on poor governance
Earlier this month, Industry and Commerce minister Mike Bimha quickly assured industry of recovery saying government was committed to improving the business environment.

“The good news is that a lot of factors are within our control if we work together as public and private sector; and next year we can see the situation improving,” Bimha said.