Home » Industry » More Firms Retrench in 2013

Over 2 300 workers lost their jobs last year after 165 companies embarked on staff rationalisation programmes, statistics from the Ministry of Labour and Social Services have shown. Responding to Mkoba Member of Parliament Mr Amos Chibaya during a parliamentary session on Wednesday Industry Minister Mike Bimha said although job losses recorded a decrease in 2013, firms that retrenched increased.

“Although the number of people retrenched went down from 4 007 in 2012 to 2 376 by end of 2013, the number of companies downsizing continue to rise,” he said.

“For example, 165 companies retrenched their workers in 2013, a figure 18 percent higher than the 147 companies who retrenched in 2013, Minister Bimha said. The industry and commerce minister said reasons for retrenchment included viability challenges, restructuring, redundancy and closures among other factors.

This comes against a backdrop of declining industrial production, which worsened to an average of 39,6 percent last year from 44,9 percent in the previous year.

Minister Bimha said Government was working on a number of initiatives as part of efforts to revive closed companies and encourage the establishment of new ones.

These include initiatives under the Industrial Development Policy, which the minister said was being aligned to objectives espoused in the Zimbabwe Agenda for Sustainable Socio-economic Transformation to guide Government economic policy until 2018.

These include industrial refinancing, review of import tariffs, cluster development initiatives, provision of adequate infrastructure and engaging the private sector.

While the majority of people who lost jobs have found gainful employment in the informal sector, Government is working on attracting foreign and domestic investment by improving the investment climate.

The value of approved investment proposals into Zimbabwe in the four months to April rose 250 percent, according to the Zimbabwe Investment Authority.

A total of 45 investment proposals valued at $410,8 million were approved by ZIA compared to 50 projects worth $117,2 million approved in the same period last year.

However, Minister Bimha said the biggest challenge affecting industry remained the issue of shortage of funding required for both working capital and recapitalisation.

“Industry alone now requires a minimum of $8 billion, a figure that went up from $2 billion (2009) for recapitalization and working capital,” Minister Bimha said.

In an attempt to mitigate the shortage of finance for industrial revival and development, Government had come up with two facilities namely the Zimbabwe Economic and Trade Revival ($70 million) and the Distressed and Marginalized Areas Fund ($40 million).

The two facilities had little impact on industrial revival, prompting the Government to mandate the Industrial Development Corporation to resume its role of providing development finance through a number of strategies.

Proposed initiatives included allocations from fiscus, instruments such as Diaspora bonds and lines of credit from countries and international funding institutions.

However the cash strapped Treasury could not provide the requested $100 million for seed capital for IDC to undertake its mandate. Government is now pursuing other alternatives to get the requisite funding.

Minister said Government had little choice but find ways to resuscitate and develop industry, seeing that the trade deficit was widening due to rising imports. While exports have increased from $2,2 billion in 2009 to $3,5 billion in 2013, imports have increase at a faster rate in the same period from $3,5 billion to $7,7 billion.

This minister Bimha said has resulted in retail space, which ordinarily should largely be filled with local products, being 70 percent occupied with imports.

“The growing import dependency is quite worrisome as it results in significant cash leakages, which in turn squeezes out any (available) liquidity space intended for investment by the local industry,” the minister said.

Source : The Herald