October 16, 2003

Economic troubles claim 250 companies

The harsh economic downturn, described as the worst to hit Zimbabwe so far, claimed about 250 companies last year, resulting in scores of workers joining the streets, a study conducted by the Confederation of Zimbabwe Industries (CZI) revealed.

The study, which shows the extent to which the once robust local economy has given in to a four-year economic recession blamed on mismanagement, noted that six companies in the engineering sector were also at the brink of closure or had filed for liquidation.

While the number of companies which closed down last year (249) is less than the 400 entities that went under in the previous year, analysts quickly pointed out this week that the reduction was not a result of improved macro-economic conditions. In fact, the economic conditions have deteriorated further and were beginning to affect neighbouring economies.

Analysts said companies are adopting survival strategies to steer their operations through the hostile trading environment dramatised by shortage of foreign currency, coal, cash and intermittent electricity cuts, hence the reduction in closures.

Of the 249 company closures, nine were in the furniture sector, 12 in the leather industry, seven in the printing industry, 98 in the engineering sector, three in the chemical industry, five from radio and television and two from the clothing industry. The motor vehicle industry, which has been affected by the influx of cheap second hand cars and the shortage of foreign exchange, emerged as the worst-hit with 113 closures. (Financial Gazette, Harare)

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