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Business Reporter
INDUSTRIES in Bulawayo need $400 million to recapitalise and the $40 million allocated by the Distressed Industries and Marginalised Areas Fund is severely inadequate, economic analyst Dr Eric Bloch has said. Speaking at the Confederation of Zimbabwe Industries annual congress in Bulawayo, he said Bulawayo needed more than half of the $700 million required to fund the revival of the country’s manufacturing industry.
He said while Dimaf was a good idea, the money set aside for the fund was little with the Government failing to honour its part of the bargain to inject capital into the facility.
“Dimaf was a positive action but the benefit has been insignificant. The primary cause is the government has not been funding to meet its obligation,” he said.
Local businesses have complained that they have failed to benefit from Dimaf because of the stringent conditions being attached by the financial institution administering the facility.
Dr Bloch said with the right policies, the manufacturing sector could be revived, with Bulawayo benefitting from its geographical position as the gateway to the south and north to resuscitate its factories.
He also said the belief that only Bulawayo had suffered from massive company closures was not true.
He said research had shown that in terms of percentage, other towns such as Gweru, Kwekwe and Mutare had suffered a similar fate.
However, he said company closures were more pronounced in Bulawayo because it was the industrial hub and in terms of numbers, more companies had shut down.
He said company closures started in 2008 when all working capital in Zimbabwe dollars was wiped out by inflation.
“All industries were suddenly undercapitalised. The money they had was useless. Those generating income from forex were not able to access it,” he said.
Dr Bloch said the country was not making full use of its resource to propel economic growth. He said minerals such as lithium and coal bed methane gas were not being exploited while only a fraction of the platinum reserves was being mined.
He said the government needed to come up with measures to protect local industry as dumping of products, especially clothing from the Far East was hurting the revival efforts.
Dr Bloch said the imported clothing products were heavily subsidised by the exporting companies’ governments while some were brought duty free under the guise that they had been made in Swaziland to take advantage of Sadc policies to promote intra- regional trade.
Faced with such a scenario, he said there was no way local clothing products could competitively compete with imported products.
“Industry is faced with unfair competition. We must not be scared of competition, but when it’s unfair it’s a different story,” he said.
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