Harare – Zimbabwe’s industry is counting losses in the aftermath of the national shutdown, protests against lower wages called for by the ZCTU, a trade union body, and the subsequent counter government crackdown through internet blockage and terror on civilians.
In an interview with Equity Axis on Wednesday, CZI president Sifelani Jabangwe, said an estimate $70 to $100 million was lost in produce per day of protests. This figure according to Jabangwe is in terms of lost national produce as measured by the GDP.
In an article by Equity Axis last week, in-house analysts estimated that a quarter billion dollars was lost during the shutdown, which is in line with the CZI estimate.
CZI is Zimbabwe’s foremost industry lobby group representing the majority of producing companies in Zimbabwe.
Losses in terms of damages incurred during the protests and afterwards were however not yet fully quantified and are still to be determined. The grain millers association however said its members lost $3 million in raids and lootings during the period in question.
In 2018 Zimbabwe is estimated to have produced goods valued at $25 billion as measured by the GDP. Government anticipated that this produce will increase to almost $25.75 billion after revising the growth lower from 6% to 3.1%.
The outcome may however come out even lower given the prevailing macroeconomic challenges. The country has for long struggled to satisfy its import demand which is critical in the supply of key factors of production such as electricity and fuel. Other key Imports are drugs and food including imports of soya bean oil for the processing of oil.
Some players have already stopped production because of the inadequacies of supplies on failure to suit suppliers’ and creditors’ outstanding dues. Surface Wilmar which was the largest player in the cooking oil space earlier in the year announced its suspending operations due to viability challenges.
Delta has largely scaled back production of its non-alcoholic beverages due to forex challenges. The company requires about $7 million a month to import some of its inputs. Government earlier stopped Delta, which is the biggest player in the beverages space from instituting an exclusive USD pricing regime. The move was meant to ensure adequate supplies are sourced.
Earlier Innscor’s subsidiary Natfoods also issued a statement suspending some its flour processing operations citing lack of forex before government intervened. Innscor is the largest player in the food processing business in Zimbabwe.
The challenges with viability has not spared exporters as well, with gold producers raising concerns over viability and low retention levels. Earlier Rio Zim the largest listed gold producer, closed down 3 of its mines, saying it is no longer to operate viably due to cashflow constraints and inability to recapitalize.
Rio Zim blamed the government for failing to give it its dues in terms of forex receipts from proceeds of gold sales. Government then was extending only 15% of the receipts in USD and the remainder in RTGS and a 10% bond note incentive.
Given the drastic fall in value of the local money, producers of minerals, especially gold, are not enthused and over the past 4 months production has significantly reduced.
Small scale miners are resorting to side marketing in neighbouring countries, while primary producers have cut back on production in anticipation of favourable pricing in future.
All this summed up will effectively result in a lower national produce than anticipated in the coming year. Further downward pressure will also come from a sharp decline in demand as the populace feels pressure from taxes and inflation.
Equity Axis News