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Businesses In Zimbabwe Failing In High Numbers

Businesses In Zimbabwe Failing In High Numbers

From The Independent

Latest official figures show that nearly 1,000 businesses collapsed over the last three years alone.

According to the Master of the High Court’s roll, scores of companies are every month applying for judicial management, liquidation and voluntary closure as provided for by the Companies Act. The Act provides that a company may be placed under judicial management if it is unable to clear its debts or when it is likely to collapse.

The Master of the High Court’s roll for September and October shows that some of the companies which were being wound up from across all economic sectors included Zimbao Mining Ventures, Infinity Asset Management, Rusape Service Station, Central African Shipping Agencies, cloth retailer Saybrook (Pvt) Ltd, and United Methodist Publications and Stationers Foundations.

Those that were placed under judicial management included ambulance service provider Mars Zimbabwe (Pvt) Ltd, road construction company Gulliver Consolidated, multi-industrial concern Phoenix Consolidated Industries, KM Financial Holdings, Model Knitwear, retailer Gutsai Holdings and several holding companies such as Apex Holdings, Shaefur Investments, Labdeck Investments and Folaway Investments.

 

Sources in the legal fraternity said a number of the companies placed under judicial management have failed to revive operations, which is the objective of judicial management.

 

This comes against a background of closure of more than 700 firms in Harare and close to 100 companies in Bulawayo as reported in this newspaper. A July 2013 National Social Security Authority Harare Regional Employer Closures and Registrations Report for the period July 2011 to July 2013 shows 711 companies in Harare closed down, rendering 8 336 individuals jobless.


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Major companies that have retrenched staff include platinum miners Zimplats and Unki, Bindura Nickel, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.

Economist John Robertson said the liquidation of companies prevents every level of development in the country, prevents GDP growth and increases the level of unemployment.

“The country will be more dependent on imports and people will move to other countries as before in search of jobs. We should ask: Why do we make things more difficult for ourselves? Why do we put up barriers for potential investors? Why don’t we protect the interests of investors and put into consideration the needs of investors and increase our FDI (Foreign Direct Investment),” he asked.

Zimbabwe has one of the most uncompetitive business environments and is ranked by the World Bank among the worst in terms of ease of doing business. The country also remains unattractive to international financing, largely due to a huge external debt estimated at about US$7 billion. This has resulted in the unavailability of long-term cheap financing with the available short-term loans being expensive.

Read more at The Independent.