Company closures blamed on banks

Patrick Chitumba Senior Reporter
THE Minister of State for Matabeleland North province Ambassador Cain Mathema has fired a broadside at foreign owned banks for refusing to provide loans to local firms – a development he said had led to the closure of many companies in the country.In an interview in the wake of plans by Hwange Colliery Company Limited (HCCL) to retrench at least half of its more than 3,200 strong work force, Ambassador Mathema said calls for the indigenisation of banks should be amplified.

“Hwange Colliery is one of the major employers in Matabeleland North province and we are not happy at this proposed retrenchment even if they say it is aimed at making the company viable,” he said.

Ambassador Mathema said the major problem which had led to the demise of local companies were the illegal sanctions imposed on Zimbabwe.

He said because of the sanctions, foreign banks like Standard Chartered had been reluctant to finance local companies yet they receive huge sums of donor funds which go to the non-governmental organisations some of which he said were advocating for regime change.

“We call upon the company to look for alternative measures that do not result in over 1,500 employees being laid off. There should be better solutions outside firing of people. It is very sad indeed,” said Ambassador Mathema.

He said once the foreign owned banks were indigenised – challenges such as failure to access loans for recapitalisation would be a thing of the past.

Ambassador Mathema said the banking sector was still operating as if the country was still in Rhodesia.

Youth, Indigenisation and Economic Empowerment Minister Francis Nhema last year said the indigenisation of foreign-owned banks would be done gradually.

In an update to shareholders over the weekend, HCCL board chairperson Farai Mutamangira said the company plans to implement a raft of measures aimed at turning around the fortunes of the beleaguered giant.

As part of efforts to make it profitable, the company would be unbundled into six Strategic Business Units (SBUs) – Hwange Colliery Holdings, Hwange Coal Mining, Hwange Plant and Equipment, Hwange Coal Processing and Cokeworks, Hwange Hospital and Hwange Properties and Estates.

However, it is the retrenchment of the employees that is worrying the people in Matabeleland North province since HCCL has been the major employer in that area.

HCCL hopes to conclude two loan facilities valued at $33,5 million at the end of the month as part of efforts to recapitalise the business.

The company has in the last four years failed to reach a deal with the Development Bank of Southern Africa for a $100 million line of credit.

The company requires at least $150 million to recapitalise its operations.

Meanwhile, a high powered delegation led by Mines and Mining Development Minister, Walter Chidhakwa is set to tour the mine tomorrow.