Zimbabwe companies expected to close shop, massive job losses loom

The lifting of a protectionist policy introduced by former president Robert Mugabe's regime last year to promote local production could see companies closing shop, resulting in massive job losses, industrialists warned yesterday.

On Tuesday, Cabinet revoked Statutory Instrument (SI) 122 of 2017 to allow individuals and companies to bring in basic commodities that are currently in short supply in a desperate bid to stabilise skyrocketing prices.

This comes at a time many Zimbabweans have been priced out of the market for basic goods due to steep price hikes blamed on acute shortages of foreign currency.

Yesterday, the Confederation of Zimbabwe Industries (CZI), warned that rescinding SI 122 was a recipe for disaster.

CZI president Sifelani Jabangwe said the import restrictions had helped revive dying companies, while enabling others increase their capacity utilisation.

"The SI 64 which later became SI 122 helped the economy to recover at a time we were in recession. In 2015, the growth of the economy was at 0,06 percent and thereafter growth was 3,7 percent in 2017 and we are now targeting six percent," he said.

Jabangwe who leads Zimbabwe's largest industrial lobby group said the removal of SI 122 means that several manufacturing companies are no longer protected from imports, particularly from South Africa - the continent's largest economy.

"The challenge is that at the moment we are still ranked lowly in terms of ease of doing business and cost of doing business so by implication what it means (is that) companies are operating in a negative environment.

"You cannot be competitive in such a scenario. So (the net effect is that) we may see some closing, some retrenching and yet those were the things we were fighting against. You were not hearing company closure or retrenchments in the last period but that could just come back," he added.

According to CZI, since the introduction of trade restrictions, industry had diversified, partnered with the agriculture sector, created a number of jobs and closed the gap on the leakage of money from the domestic economy.

Addressing journalists in Harare on Tuesday, Finance minister Mthuli Ncube said local companies had brought the amendment of SI 122 on themselves by allowing prices to go haywire.

Ncube said the measure would also reduce the demand for foreign currency as individuals and companies would be able to source their own funds to import.

The Oil Expressers Association of Zimbabwe (OEAZ) - a grouping of seven producers who supply 95 percent of the country's edible oils - said they were concerned by the policy inconsistencies from government.

"Over $60 million of investment has gone into the sector since 2014 by big multinational companies like Surface Wilmar and Willowton. How will the investor community trust our national programmes when we open and close on policy at short notice?" queried OEAZ president Busisa Moyo.

He said industries built over the last nine years may not be able to recover from the setback, risking over 2 000 people employed by the sector.

"Most of the traders clamouring for unrestrained importation have no interest in contributing to the fiscus and are most likely to avoid all duties at the border which means government will lose the industries that they have built over the last nine years but will not be able to claw back the lost revenue from duties," said Moyo.