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Oliver Kazunga Senior Business Reporter
RESERVE Bank of Zimbabwe (RBZ) Governor Dr John Mangudya says turning around Bulawayo’s economy requires prioritised financing of quick-winning firms that will inject life into strategic sectors down the production chain.Discussing challenges facing the country’s second largest city during a post mid-term monetary policy statement review organised by the Matabeleland Chamber of Industries in Bulawayo yesterday, Dr Mangudya said a blanket funding system would not achieve the desired quick revival – noting that some firms were beyond redemption.
“We should start looking at how to resuscitate industries in Bulawayo, how do we transform our limitations into opportunities looking at what are the opportunities available in Bulawayo? Should it (city) be turned into a Special Economic Zone (SEZ)? We need to identify quick-winning companies not sectors because you will find out that there are other companies that are doing well within a cluster that is not doing well.
“If you look at the clothing industry for example, the sector is not doing well but there are other companies within that sector that are doing well. So let’s identify the good companies with a quick-win effect, which we can build, expand and replicate later that model to build the economy.”
The RBZ chief said pumping money into “dead” firms was not ideal at a time when Zimbabweans are expecting a quick revival and creation of jobs.
“Let’s avoid businesses that have no cash flow. What do you want to achieve if you fund a distressed firm? We don’t want to create debt by using funds for experimentation.
“Don’t just think of fixing a plant for the sake of it. We want to be in business,” said Dr Mangudya.
He said companies in Bulawayo’s food industry such as United Refineries and Lobel’s were doing well and the central bank believes it is high time Zimbabwe moves forward.
“Identification of quick-wins will facilitate financial intervention as it is easy to put money into a company whose corporate governance you are aware of . . . but if you put funds into companies that are wasteful, it means those resources will go to waste,” said Dr Mangudya.
He said financers were prepared to avail financial packages to help boost productive quick-winning entities once identified. Once an industrial capital in the country, Bulawayo has experienced closure of close to 100 firms in the last decade resulting in loss of jobs to an estimated 20,000 workers. At the adoption of the multiple currency system in 2009, a number of firms sought loans from banks at high interest rates and failed to service them resulting in their closure while some took refuge in judicial management.
Liquidity constraints, intermittent power supplies, obsolete machinery and competition from cheap imports have worsened the plight of surviving firms who have been dogged by low capacity utilisation and declining competitiveness.
Manufacturing sector capacity utilisation dropped from an average of 44.9 percent in 2012 to 39.6 percent last year, the Confederation of Zimbabwe Industries say. Economic analysts fear that capacity utilisation could further tumble down this year to about 30 percent if the trend persists.
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