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Mthuli Ncube pledges to tackle capital flight

by Staff reporter
13 Feb 2019 at 08:40hrs | Views
FINANCE minister Mthuli Ncube on Monday pledged to support food and beverage manufacturer, Nestle Private Limited, as government desperately tries to contain capital flight.

A large number of companies are experiencing viability problems due to scarce foreign currency to source raw materials and machinery and are on the verge of collapse, while some have already suspended operations.

Singapore-domiciled cooking oil manufacturer, Surface Wilmar last month discontinued operations as a result of foreign exchange shortages.

"I want to understand the acuteness of the foreign currency shortage that they require. I am also keen to understand the backward linkages that these companies have for the rest of the economy. The backward linkages they have with other companies in the packaging sector such as Hunyani and others. These are very critical. So if you don't assist Nestle, their suppliers, such as Hunyani will also be under pressure. It cascades right through the value chain," he said during a tour of the Nestle plant.

Last week, Hunyani's parent company, NamPak said It was struggling to access foreign exchange to purchase materials and to make matters worse shareholders have cut external financial support due to non-payment of debts.

Several listed companies are battling to pay their foreign shareholders dividends due to the prevailing foreign currency crisis.

"We also want to assess the impact of our policies, how they impact companies like Nestle. Remember this is a foreign investor. It was founded 150 years ago. This is foreign direct investment. As government we want to appreciate the impact of our policies. We want to make sure that they invest some more, but also create more jobs and also that they stay here and they don't migrate to other countries and other regions," Ncube said.

Government is on a charm offensive drive to attract and retain investment in the country through its mantra "Zimbabwe is open for business" which, however, has not been followed through with an appropriate enabling operating environment.

Currently, the operating environment is over-burdened by currency distortions, policy inconsistency and sovereign risk associated with the country.

Source - newsday