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Lovemore Zigara Midlands Correspondent
KWEKWE-based steel manufacturer, Steelmakers, has been rattled by the liquidity crunch prevailing in the country and this has resulted in turnover plummeting by 50 percent.Steelmakers group general manager Alexander Johnson, said the company had realised $2,5 million in turnover in the first quarter down from about $5 million it generated during the same period last year.
Johnson attributed the drop in revenue to a shortage of money circulating in the formal sector.
“The liquidity challenges prevailing in the economy have seriously affected our operations. Last year we generated about $5 million in revenue and in the first quarter of this year we realised just $2,5 million,” he said.
“There is a need for fresh capital injection into the economy if business is to improve. At the moment money is circulating in the informal sector where people are buying cars and other things which are not productive. There is need to redirect money in the informal sector into the formal channels such as banks.”
Johnson said the steel giant had been forced to shelve some of its projects owing to the cash crunch.
Steelmakers needs at least $120 million to recapitalise its operations including its Masvingo plant to ramp production.
Meanwhile, Johnson has called on government to review mining laws which classify steel as a mineral instead of making it a finished product.
The classification of steel as a raw material has resulted in steel exporters being charged about 1 percent commission by the Minerals Marketing Corporation of Zimbabwe (MMCZ) as well as two percent in royalties.
He said government had to put in place a statutory instrument which would categorise steel as a finished product.
Johnson said the country’s tax regime had resulted in the steel industry being uncompetitive in the region.
Online Reporter