Zim economy remains fragile

Published: 10 July 2014
Zimbabwe's economy remained fragile during the first half of the year, a period characterised by closure of companies, liquidations, property attachment over debt and continued spiralling of unemployment.

Analysts and pressure groups contacted by Southern Eye on the performance of the economy in the past six months pointed out that liquidity challenges, out-dated technologies, structural bottlenecks that include power shortages and infrastructure deficits, corruption and a volatile, fragile global financial environment did not augur well for growth in the comatose economy.

"There are a number of companies that have succumbed so far this year as compared to last year.

"Many people lost their jobs. Many companies and individuals got their properties auctioned and sold," the Affirmative Action Group president for Matabeleland chapter, Roy Sibanda, said.

"The number of companies taken to court has gone up in the last six months.

"More people have been thrown onto the streets and the percentage is growing alarmingly.

"There has to be a change for better and the government should put systems on the ground that will resuscitate ailing companies.

"Most companies especially small-to-medium businesses, are not properly funded, so the government should make capital available for such businesses," he added.

Zimbabwe Congress of Trade Unions (ZCTU) general-secretary Japheth Moyo said the first half of the year was hectic especially for workers as more companies were closed and thousands of workers thrown onto streets.

"What we have realised is that the positives we have gained during the inclusive government have diminished.

Now we have recorded reports of company closures, people not getting their salaries and, employees failing to remit workers' pension to National Social Security Authority (NSSA). As workers, this has been the hard year and we liken it to the 2008 era.

We are not paid and the issues of liquidity crunch are still the reality," Moyo said.

An economic analyst Eric Bloch estimated that the economy grew marginally by 3%.

"I think there was marginal economic growth of 3% and the growth rate of 3% is very small. However, it is the first step in the right direction," he said.

"To improve this, there should be foreign direct investment in the country and consistence policies as well as constant power supply."

Another economist, Prosper Chitambara, said the economy during the first half of the year was very fragile and weak and the major binding constraint, among others, was the liquidity crunch.

"We witnessed deindustralisation and retrenchments of workers.

"The imports figures remained high compared to exports," he said.

"We are not competitive as the economy and things are not good.

"The government should reduce cost of doing business to achieve high production. Zimbabwe is a high cost economy as compared to other regional countries and the country should work on investment policies because investors want to invest where there is policy consistency." he added.

Chitambara said according to World Bank and International Monetary Fund, Zimbabwe only achieved an economic growth rate of 3%.

According to NSSA, at least 10 firms have been closing down every month since the beginning of the year and this could mean 60 companies have closed shop.

The count could get to 120 by year-end if the situation remains dire.

A survey by the ZCTU has indicated from the 1,3 million workers who were formally employed in 2012, 1,2 million remained in employment.
- newsday
Tags: Economy,

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