Industry needs urgent bailout

By The NewsDay | Nov. 11, 2020 | 2 Min read

RECENTLY, we reported that the economic crisis in the country had forced the Confederation of Zimbabwe Industries (CZI) to retrench staff. This obviously points to a far bigger crisis. Industrial bodies derive their survival from subscriptions paid by companies. When companies are ailing, one of the first things they do is to withdraw their membership […]

RECENTLY, we reported that the economic crisis in the country had forced the Confederation of Zimbabwe Industries (CZI) to retrench staff.

This obviously points to a far bigger crisis.

Industrial bodies derive their survival from subscriptions paid by companies.

When companies are ailing, one of the first things they do is to withdraw their membership from business lobby organisation like the CZI, or stop paying subscriptions.

This should be the case with the CZI now, as well as its peers, the Zimbabwe National Chamber of Commerce, which has suggested that government takes over some of these organisations’ bills.

We believe government should inject the $18 billion COVID-19 package promised in May to bail out industry urgently to avoid bloodbath and further haemorrhaging of the economy.

This is an urgent matter as we have noted an extremely worrying trend recently, which points to a silent carnage that is blowing through companies.

First it was the closure of household goods production firm, United Refineries Limited last week.

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Then in the past week a string of third quarter financial statements have showed that industries are operating in a far more difficult climate than we thought. Volumes and revenues are coming off at a frightening pace.

At Truworths, revenues declined to $165,3 million during the period, from $177,8 million in 2019 due to plummeting demand and a blazing liquidity crisis.

Unifreight posted an inflation adjusted profit before tax of $19 million but the volatility of the reporting currency forced transported tonnages to fall by 22%.

The Livestock and Meat Advisory Council said deboned meat imports fell by 73%, which points to another bloodbath in that sector.

The cigarette maker, British American Tobacco said volumes fell by 8%.

One of the most accurate measures of a company’s success in a hyperinflationary period is its volumes.

If these are declining everyone must be worried.

This is why we urge authorities to put on their thinking caps and come up with strategies that will save industries.

The most basic steps to take are increasing spending power and stabilising inflation and prices.

Without this, the end game may be bloody.