News / Local
60% of Bulawayo companies close shop
19 Feb 2021 at 02:04hrs | Views
THE labour movement, consumer rights groups, small enterprises and informal traders have lamented the continuous collapse of Bulawayo industries amid revelations that up to 60% of companies have closed shop.
Some businesses have had their premises either derelict or rented out for subordinate activities. Bulawayo used to be known as Zimbabwe's industrial hub in the immediate post-independence era, serving as a key production and transit artery.
However, this status vanished around 1990 during the Economic Structural Adjustment Programme (Esap) and worsened in the new millennium when the government introduced the land reform programme. The land invasions destabilised, disrupted and displaced commercial farmers, resulting in the decline in food production levels.
Political violence is also blamed for the decline of the Bulawayo industrial status.
Zimbabwe Congress of Trade Unions (ZCTU) Western Region chairman Ambrose Sibindi described Zimbabwe's second largest city as a ghost city after about 60% of industry closed or are rented by indigenous business people who share space.
"Companies still in operation have scaled down operations to about between 20% and 25%. The problem started in 1990 when the government introduced Economic Structural Adjustment Programmes and as labour we warned the government that the project has not worked the world over," Sibindi said.
"Despite research based submissions the government went ahead with the programme. Few weeks later companies retrenched, casualised labour, closed and downsized productions."
Sibindi said companies with many branches closed some branches in Bulawayo and relocated to Harare leading to many workers being laid off.
"Between 40% and 45% companies relocated and about 75% of workers lost their jobs either through retrenchment, company closures, relocations or downsizing. This increased levels of poverty, the crime rate also increased and debt arrears in rates payment to BCC ballooned. Government needs to have deliberate policies to attract investment to the city and it must fund revival of the Cold Storage Company (CSC) and National Railways of Zimbabwe (NRZ," he said.
During the government of national unity (GNU) between 2009 and 2013, the Distressed Industries and Marginalised Areas Fund (Dimaf) was introduced to recapitalise affected industries including those in Bulawayo. The government allocated US$40 million towards Dimaf but stakeholders said the funding was inadequate to meet the demand of the companies affected.
A $70-million Zimbabwe Economic and Trade Revival Facility (Zetref) was introduced. Indications are that almost 15 years after these facilities were announced, they have failed to yield any fruit as most companies are still closed.
"Dimaf was a good plan but it did not revive the Bulawayo industry. Decisions were made in Harare and the then Industry and Commerce minister Welshman Ncube had a clear plan of action but Harare frustrated his noble ideas," Sibindi said.
National Consumer Rights Association (Nacora) advocacy advisor Effie Ncube said the collapse of the Bulawayo industry was not a mistake but a deliberate policy to marginalise the Matabeleland region.
He said an estimated 80% of industries that were in Bulawayo in 1980 either closed or relocated to Harare by the end of 2008.
Ncube said Zimbabwe is now a heap of political and economic ruins with only one government of Zanu-PF that ran the country since 1980, except in 2009 to 2013 (during the inclusive government).
"It is under the tenure of Zanu-PF that the de-industrialisation of Bulawayo took place. So they are to blame," he said.
"The most important capital needed is good governance and adherence to the rule of law. We just need the right people in political offices. The corruption and political risk factors are too high."
He said investors preferred Namibia, Mozambique, South Africa and other investment destinations than face policy uncertainty, corruption and arbitrary decisions in Zimbabwe. Bulawayo Vendors and Traders Association (BVTA) director Michael Ndiweni said thousands of people lost their jobs during de-industrialisation.
"When we did our study in Bulawayo as BVTA in 2018, we had about 90% in the informal sector. So 70% of the population in Bulawayo is found in the informal sector meaning they are jobless..." he said.
Streetwise Informal Traders Association director Percy Mcijo said the government is not putting any strategies to revive industry and Bulawayo is just a forgotten industrial hub. About 48 companies received loans totaling $28m from the $40m Dimaf facility between 2011 and 2014. Many firms complained over tax issues and the short tenure of loans, terms they felt were not ideal for distressed entities.
In 2010, the government entered into a partnership with Old Mutual under a $40m facility disbursed through CABS. Another partnership was struck with Afreximbank to the tune of $70m under the auspices of Zetref.
This fund was being disbursed through 11 financial institutions with a national branch network that included BancABC, Metropolitan Bank, People's Own Savings Bank, TN Bank, ZB Bank, NMB Bank, Kingdom Bank, Agribank, Infrastructure Development Bank of Zimbabwe, FBC Bank and Trust Bank.
As of 2013, over 90 companies had since 2009 closed shop in Bulawayo, leaving more than 20 000 workers jobless.
Some businesses have had their premises either derelict or rented out for subordinate activities. Bulawayo used to be known as Zimbabwe's industrial hub in the immediate post-independence era, serving as a key production and transit artery.
However, this status vanished around 1990 during the Economic Structural Adjustment Programme (Esap) and worsened in the new millennium when the government introduced the land reform programme. The land invasions destabilised, disrupted and displaced commercial farmers, resulting in the decline in food production levels.
Political violence is also blamed for the decline of the Bulawayo industrial status.
Zimbabwe Congress of Trade Unions (ZCTU) Western Region chairman Ambrose Sibindi described Zimbabwe's second largest city as a ghost city after about 60% of industry closed or are rented by indigenous business people who share space.
"Companies still in operation have scaled down operations to about between 20% and 25%. The problem started in 1990 when the government introduced Economic Structural Adjustment Programmes and as labour we warned the government that the project has not worked the world over," Sibindi said.
"Despite research based submissions the government went ahead with the programme. Few weeks later companies retrenched, casualised labour, closed and downsized productions."
Sibindi said companies with many branches closed some branches in Bulawayo and relocated to Harare leading to many workers being laid off.
"Between 40% and 45% companies relocated and about 75% of workers lost their jobs either through retrenchment, company closures, relocations or downsizing. This increased levels of poverty, the crime rate also increased and debt arrears in rates payment to BCC ballooned. Government needs to have deliberate policies to attract investment to the city and it must fund revival of the Cold Storage Company (CSC) and National Railways of Zimbabwe (NRZ," he said.
During the government of national unity (GNU) between 2009 and 2013, the Distressed Industries and Marginalised Areas Fund (Dimaf) was introduced to recapitalise affected industries including those in Bulawayo. The government allocated US$40 million towards Dimaf but stakeholders said the funding was inadequate to meet the demand of the companies affected.
A $70-million Zimbabwe Economic and Trade Revival Facility (Zetref) was introduced. Indications are that almost 15 years after these facilities were announced, they have failed to yield any fruit as most companies are still closed.
"Dimaf was a good plan but it did not revive the Bulawayo industry. Decisions were made in Harare and the then Industry and Commerce minister Welshman Ncube had a clear plan of action but Harare frustrated his noble ideas," Sibindi said.
National Consumer Rights Association (Nacora) advocacy advisor Effie Ncube said the collapse of the Bulawayo industry was not a mistake but a deliberate policy to marginalise the Matabeleland region.
He said an estimated 80% of industries that were in Bulawayo in 1980 either closed or relocated to Harare by the end of 2008.
Ncube said Zimbabwe is now a heap of political and economic ruins with only one government of Zanu-PF that ran the country since 1980, except in 2009 to 2013 (during the inclusive government).
"It is under the tenure of Zanu-PF that the de-industrialisation of Bulawayo took place. So they are to blame," he said.
"The most important capital needed is good governance and adherence to the rule of law. We just need the right people in political offices. The corruption and political risk factors are too high."
He said investors preferred Namibia, Mozambique, South Africa and other investment destinations than face policy uncertainty, corruption and arbitrary decisions in Zimbabwe. Bulawayo Vendors and Traders Association (BVTA) director Michael Ndiweni said thousands of people lost their jobs during de-industrialisation.
"When we did our study in Bulawayo as BVTA in 2018, we had about 90% in the informal sector. So 70% of the population in Bulawayo is found in the informal sector meaning they are jobless..." he said.
Streetwise Informal Traders Association director Percy Mcijo said the government is not putting any strategies to revive industry and Bulawayo is just a forgotten industrial hub. About 48 companies received loans totaling $28m from the $40m Dimaf facility between 2011 and 2014. Many firms complained over tax issues and the short tenure of loans, terms they felt were not ideal for distressed entities.
In 2010, the government entered into a partnership with Old Mutual under a $40m facility disbursed through CABS. Another partnership was struck with Afreximbank to the tune of $70m under the auspices of Zetref.
This fund was being disbursed through 11 financial institutions with a national branch network that included BancABC, Metropolitan Bank, People's Own Savings Bank, TN Bank, ZB Bank, NMB Bank, Kingdom Bank, Agribank, Infrastructure Development Bank of Zimbabwe, FBC Bank and Trust Bank.
As of 2013, over 90 companies had since 2009 closed shop in Bulawayo, leaving more than 20 000 workers jobless.
Source - the independent
