Business / Local
Bulawayo closed for business
11 Sep 2014 at 04:15hrs | Views
SIXTY percent of companies operating in Bulawayo have been placed under judicial management, indicative of the dire state of affairs in the country's second largest city.
Once Zimbabwe's industrial hub, Bulawayo is now a pale shadow of its former self. Estimates from the Industry Ministry indicate that over 100 firms in the "City of Kings", as Bulawayo is affectionately known, have shutdown their operations this year alone.
Companies that have either shut down or have been placed under judicial management include Savanna Woods, Trade Power, Textile Mills and Willsgrove among many others. Youth Development, Indigenisation and Economic Empowerment Minister, Francis Nhema, recently made startling disclosures that 60 percent of companies in Bulawayo have been placed under judicial management.
Judicial management applies where a company has been wound up for financial reasons, when it could have been saved had it been managed well. Judicial management was introduced to assist this type of company to overcome a temporary setback without going out of business. A judicial management order usually gives the company a moratorium on its debts. Essentially, the court replaces the directors. A provisional judicial manager is appointed, to assume control until the final judicial manager can be appointed.
"In Bulawayo, 60 percent of businesses are under judicial management. This is something which we allowed and now it is difficult to entangle ourselves from. We need to find ways to untangle ourselves. It is difficult now to enforce compliance because of judicial management, but that should not prevent us," he said.
Government promulgated a controversial empowerment law in 2008 that compels foreign-owned firms to give up 51 percent ownership to blacks. But the authorities are having nightmares in enforcing the Act especially on distressed firms that can barely keep their heads above the water. The collapse of industry is piling pressure on President Robert Mugabe's administration, whose campaign messages ahead of last year's polls were anchored on reviving industry and creating more jobs.
At his inauguration speech after winning the polls last year, the Zanu-PF leader said Bulawayo had been turned into an "industrial scrap-yard" and vowed that his administration would intervene to reverse the situation. Despite the promises for action, the economic situation has gotten worse. And for the first time, the Zanu-PF government is now getting warnings from within its ranks that it faces civil unrest if it does not find lasting solutions to the country's economic meltdown.
Recently, Jacob Mudenda, the Speaker of the National Assembly, warned that political careers could come to a premature end if the country's leadership failed to resolve the economic impasse. "The consequences of failure to deliver on our mandate might lead to the unceremonious and untimely amputation of our political careers, or even worse still, trigger social convulsions that might endanger the general peace and stability we have enjoyed since independence as well as the period after the 2013 general elections.
"Declaratory achievements not buttressed by substantive and discernible progress on the ground will alienate the people we undertook to represent as honourable members. The hitherto lackadaisical and fragmented approach to national development agenda has to be supplanted with a consolidated revolutionary thrust that measures success in terms of visible quantifiable deliverables," he said.
Government's 250 000 civil servants are among the most disgruntled section of society. Pay dates for civil servants have become erratic, with government failing to guarantee one standard date to dispense salaries as it scrounges month after month for resources.
Ray Chipendo, an analyst based in Johannesburg, South Africa believes that much of Zimbabwe's economic challenges are a result of lack of investor confidence, itself a consequence of "abrupt, not well deliberated and drastic economic and political policies on trade, natural resources and ownership."
Once Zimbabwe's industrial hub, Bulawayo is now a pale shadow of its former self. Estimates from the Industry Ministry indicate that over 100 firms in the "City of Kings", as Bulawayo is affectionately known, have shutdown their operations this year alone.
Companies that have either shut down or have been placed under judicial management include Savanna Woods, Trade Power, Textile Mills and Willsgrove among many others. Youth Development, Indigenisation and Economic Empowerment Minister, Francis Nhema, recently made startling disclosures that 60 percent of companies in Bulawayo have been placed under judicial management.
Judicial management applies where a company has been wound up for financial reasons, when it could have been saved had it been managed well. Judicial management was introduced to assist this type of company to overcome a temporary setback without going out of business. A judicial management order usually gives the company a moratorium on its debts. Essentially, the court replaces the directors. A provisional judicial manager is appointed, to assume control until the final judicial manager can be appointed.
"In Bulawayo, 60 percent of businesses are under judicial management. This is something which we allowed and now it is difficult to entangle ourselves from. We need to find ways to untangle ourselves. It is difficult now to enforce compliance because of judicial management, but that should not prevent us," he said.
Government promulgated a controversial empowerment law in 2008 that compels foreign-owned firms to give up 51 percent ownership to blacks. But the authorities are having nightmares in enforcing the Act especially on distressed firms that can barely keep their heads above the water. The collapse of industry is piling pressure on President Robert Mugabe's administration, whose campaign messages ahead of last year's polls were anchored on reviving industry and creating more jobs.
At his inauguration speech after winning the polls last year, the Zanu-PF leader said Bulawayo had been turned into an "industrial scrap-yard" and vowed that his administration would intervene to reverse the situation. Despite the promises for action, the economic situation has gotten worse. And for the first time, the Zanu-PF government is now getting warnings from within its ranks that it faces civil unrest if it does not find lasting solutions to the country's economic meltdown.
Recently, Jacob Mudenda, the Speaker of the National Assembly, warned that political careers could come to a premature end if the country's leadership failed to resolve the economic impasse. "The consequences of failure to deliver on our mandate might lead to the unceremonious and untimely amputation of our political careers, or even worse still, trigger social convulsions that might endanger the general peace and stability we have enjoyed since independence as well as the period after the 2013 general elections.
"Declaratory achievements not buttressed by substantive and discernible progress on the ground will alienate the people we undertook to represent as honourable members. The hitherto lackadaisical and fragmented approach to national development agenda has to be supplanted with a consolidated revolutionary thrust that measures success in terms of visible quantifiable deliverables," he said.
Government's 250 000 civil servants are among the most disgruntled section of society. Pay dates for civil servants have become erratic, with government failing to guarantee one standard date to dispense salaries as it scrounges month after month for resources.
Ray Chipendo, an analyst based in Johannesburg, South Africa believes that much of Zimbabwe's economic challenges are a result of lack of investor confidence, itself a consequence of "abrupt, not well deliberated and drastic economic and political policies on trade, natural resources and ownership."
Source - fingaz
