adminAccording to a study on the causes of de-industrialisation of Bulawayo carried out by the National University of Science and Technology (Nust) from September last year, the city is suffering because of a host of factors that include lack of vibrant local entrepreneurs.
Nust’s Technopark Departmental director Dr Eli Mtetwa presented the research findings to captains of industry during the Confederation of Zimbabwe Industries (CZI) meeting in Bulawayo on Tuesday.
The Technopark Department is a strategic business unit that acts as an interface between the university’s research and innovation efforts and those of external business stakeholders.
The research noted that the ownership of the city’s industries has been taken over by black Zimbabweans who come from other regions.
“Bulawayo has almost no bourgeoisie of its own. The main challenge that is facing Bulawayo is that the ownership of businesses has shifted to the hands of black Zimbabweans who have access to the funds and those are Harare people.
“In many cases these are owners who are not concerned with the welfare of Bulawayo. There were cases where asset stripping had taken place that is, factories that were purchased only to be quickly stripped of equipment and other movable assets and therefore reduced to closure,” reads part of the research document.
Dr Mtetwa said there were serious consequences to the on-going closure of industries in Bulawayo, which has rendered more than 20 000 people jobless.
“The decline of economic activity in Bulawayo as a result of de-industrialisation became a topical issue in 2010 and 2011. As Nust, we conducted a practical survey and according to the Bulawayo City Council, asset stripping destroyed the industries in the city,” said Dr Mtetwa.
He said the survey also indicated that the prolonged delay in the materialisation of the Distressed Industries and Marginalised Areas Fund (Dimaf) was worsening the plight of the city’s companies that desperately need funding to be fully operational.
Said Dr Mtetwa: “We also found out that due to working capital problems, 50 percent of the surveyed companies in the textile industry were under judicial management as of end of the first quarter of 2012. The same situation applied to a significant portion of the leather industry.”
He said from the data collected, big companies were the most affected by liquidity as a result of their great expenditure associated with their operations.
“Since Zimbabwe is somewhat backward technologically, the companies are more labour intensive than capital intensive, thus the wage bill is often more than what the company can manage. Intense competition from cheap imports, especially from China, has immensely reduced the sales turnover rate of companies, rendering the companies unable to convert stock to cash,” said Dr Mtetwa.
He also attributed de-industrialisation of Bulawayo to high borrowing rates from financial institutions.
“High borrowing rates from financial institutions, which are usually more than 20 percent, result in current liabilities of some companies to be more than their current assets. Some companies are now failing to repay their loans to the banks, while some fail even to secure funds from the banks because of their poor credit ratings. Most of the companies have also suffered a considerable loss of skills between the year 2000 and 2009,” he said.
Dr Mtetwa said out of the surveyed companies, most of them indicated that the utility bills were their major source of grief.
He emphasised the need to create a macro-economic environment which will enable the banks in the country to find it worthwhile to lend money to the productive sector and called for the removal of import duties on raw materials that are destined for value addition within the country.
“It should not be the role of Government to lend money to industry but to create an environment where banks would be able to lend money to industries.
“The industries also complained that Government was charging import duty on raw materials coming into the country, which renders locally manufactured goods to be price uncompetitive when compared with imported goods,” said Dr Mtetwa.
The president of the Matabeleland chapter of the CZI, Mr Cletus Moyo, said the survey conducted by Nust would help the captains of industry to map the way forward in reviving the industries in Bulawayo.
He said it was important for the organisations to make follow-up meetings and continue to advise the Government on improving the country’s economy.
Online Reporter