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THE business environment in Bulawayo continues to get worse with reports that 13 city companies and seven individual businesspeople have had their property worth millions of dollars attached over failure to service loans owed to several financial institutions. Bulawayo Real Estate announced in a notice on Monday that it had been granted permission by the High Court to sell by public auction the properties of the companies and individuals in order to recover the money owed.
It is understandable that banks are in business and when they lend money they expect a return on the loans. But perhaps the situation in Bulawayo now calls for special treatment approach because it is not a secret that businesses in the city and in other parts of Zimbabwe have been struggling. Companies and other businesses are failing to service their debts because they are undercapitalised. Increased litigation will only result in more companies and individual enterprises folding at a time when we are clamouring for the need to ensure the ailing firms are propped up while the closed ones are revived.
Zimbabwe has experienced a massive closure of industries in the last decade with Bulawayo, which was once the country’s industrial hub, the major casualty as the city has been reduced into a pale shadow of its former self.
We urge Government to look into each case based on merit and find a way of saving these businesses and their properties from going under.
Due diligence exercises must be carried out on each business to find out where things went wrong and prescribe solutions that are amicable to all parties concerned, the lenders (banks), the companies and workers.
Maybe a moratorium on the litigations could be negotiated for and those businesses with genuine cases can be given another chance to revive their operations.
Once this is done the industries must then be allowed to service their loans.
What is now required are cheap loans with reasonable interest rates to allow the companies a chance to regain their footing.
The biggest challenge is on the Government to find cheap sources of finance to help these industries because at the rate of the litigations, there will soon be no industry or any other business to talk about in Bulawayo.
The Affirmative Action Group recently indicated its intentions to intervene in the matter involving litigations saying the development was against the spirit of the revival of industries.
The organisation, which champions the empowerment of indigenous Zimbabweans, vowed to approach the highest office in the land, the President, over the issue.
At the same time banks are arguing that they are taking to attaching property as a last resort.
A top banker and past president of the Bankers Association of Zimbabwe Mr John Mushayavanhu best summed up the difficulty that both bankers and companies are finding themselves in.
Mr Mushayavanhu said it was the wish of every financial institution to avail funding for vibrant business proposals and that defaulting on loan repayments could not be the basis for denying a client funding.
This means a company or individual businessperson can still be able to borrow even when they still owe from previous loans.
This is where we are saying due diligence should now be carried out to find out which businesses can be assisted to revive their operations even though they owe.
If it can be proved that such companies have the prospects of doing well, they should be helped and given more time to repay their loans.
We urge all concerned stakeholders, industry, banks and the Government to find a way out of this jigsaw puzzle.
Online Reporter