Business
12 - 23 March 2014 - The Observer
The Observer
The Observer - 23 March 2014 -- 12
08 December 2013 10
149 companies apply
for liquidation
Zisco debts hits $200m, govt admits blame
A
T least 149 companies filed for
liquidation at the High Court in
2012, failing to keep up with high
operational costs a local think tank said on
Friday, and more are seen going under in 2013
as economic conditions worsen.
Companies are battling with high financing
costs, with banks charging as much as 20
percent interest and the Zimbabwe Economic
Policy Analysis and Research Unit (ZEPARU)
said most of those that applied for liquidation
were on the basis that they could not pay their
debts
Labour costs in Zimbabwe are among the
highest in Southern Africa while the electricity
costs remain prohibitive and most companies
are stuck with aged machinery that is expensive
to maintain.
The number of companies seeking
liquidation has progressively increased since
dollarisation in 2009. In 2010, 50 companies,
almost five times more than the prior year
applied for liquidation. The number increased
to 73 in 2011 and more than doubled in 2012
to 149.
The number could be higher in 2013 as
the economy is stuttering in the aftermath
of a disputed July 31 election that extended
President Robert Mugabe’s 33-year rule and
a cash squeeze that has reduced consumer
demand.
Cecil Madondo of Tudor House
Consultants who has managed 25 companies
in nearly two decades, said most companies
were placed under judicial management or
liquidation due to gross mismanagement, lack
of effective corporate governance structures
and high level of indebtedness.
“You find a company technically insolvent
sometimes with more liabilities than assets
regardless of its viability,” he said.
He said undercapitalisation was a major
challenge facing most companies under
judicial management resulting in them failing
to buy basic material required to revive them.
“The major problem we face as judicial
managers is lack of access to capital in order
to address these problems,” he said.
Another judicial manager, Reggie Saruchera
of Grant Thornton said the empowerment
law requiring foreign owned companies to be
51 percent owned by local blacks was making
it difficult for potential investors to put their
money in distressed companies.
“There must be a difference on how the
company is being bailed out,” he said.
He called for a legislation that forces
shareholders of distressed companies to
relinquish power for the benefit of creditors.
“They don’t want to relinquish shareholding,
they don’t have money to put into the business
and at the same time the depositors and
creditors are suffering, where do we draw the
line?” he said.
He also complained about the country’s
labour laws which were not favourable to
ISCOSTEEL’S arrears to its
workers and domestic creditors
has risen to $200 million from
$72 million two and half years ago
with government failing to meet its end of the
deal with Indian steel giant Essar Holdings, an
official said on Thursday.
Government agreed to sell 54 percent to
the Indian company in November 2010 and
under the agr eement Essar was supposed
to inherit the company’s foreign debt which
amounted to $300 million.
The two parties agreed to share the
domestic debt which amounted to $72 million
then, based on the shareholding structure. The
joint venture was renamed NewZim Steel.
Industry and Commerce Minister
Mike Bimha told delegates attending a
Z
Confederation of Zimbabwe Industry
Zim Asset review meeting in Bulawayo on
Thursday that Essar managed to meet its
part of the bargain but Government failed,
resulting in the accumulation of arrears and
discontent from the Indian company.
“Since the deal was signed Government
has failed to pay any cent and now Ziscosteel’s
obligations to local creditors is at $200 million.
The money includes salaries for workers,
the pension fund and money owed to local
authorities and service providers,” he said.
Bimha said the two parties were working
out a solution and that the Indian company
has committed to its earlier pledge to take
over the ailing steel company.
“I was in India two weeks ago and I met
the investors. The Essar vice-chairman will
be coming to Zimbabwe very soon so that we
sign a concrete deal. In the next two weeks I
will be able to give you the exact dates.”
He said the government had assured Essar
that its investment was still secure.
“We have issued a special grant to Essar
for exploration work, we have also given
Reggie Saruchera of iron ore in Buchwa
Essar certain claims of Grant Thornton
and Redcliff.”
employers making it difficult for a judicial
Bimha retrench was necessary order
manager tosaid therewhere still a longinway to
bring backcompany. giant.
to revive a the steel
“A lot of infrastructure has to be rebuilt
from scratch. There is need for a new furnace,
new coke oven as some of the equipment
can no longer be rehabilitated,” he said. - The
Source
US backs Zim women entrepreneurs
to boost trade
T
EcoCash has changed lives: Steward Bank
he United States Embassy government officials from the Zimbabwe chapter is to capitalize
has supported the launch Ministry of Women Affairs, Gender on providing (opportunity) for
of
the
Zimbabwean and Community Development; women in business.
Chapter of the African Women and the Ministry of Industry and
“We believe as AWEP that once
Entrepreneurship Program (AWEP)
at a funtion COCASH recently.
in Harare has changed people’s
“No-one really thought it was going to
The group will since to expand which become a fully-fledged ecosystem,” Matsekesa
work its launch,
lives
and support Zimbabwean by the complete said, noting that the service gained one million
was prompted women
in business distrust of the country’s banking subscribers in its first six months, with 3.2
as well as assist them
export goods and services to other
system, according to Steward Bank head of million subscribers using the network to date.
countries, including the United
mass banking Francis Matsekesa.
“It has become a way of life. Without
States.
Speaking on to seesecond day of Africa’s EcoCash, I don’t know where a lot of
the the launch of
“I am excited
Payments, Banking in Zimbabwe,”
this AWEP chapter and Retail Show 2014, Zimbabweans would be,” he said. “It has
Matsekesa said EcoCash was aat necessary really transformed lives.”
said Ambassador Bruce Wharton
innovation against a countrywide background
Matsekesa said the system has had a
the launch.
of “I have often said that the financial services particularly large impact on informal sector
disappointment in Zimbabwe’s
sector. resource is its people – and
workers, and has changed the way people
strongest
this is a had to really follow thosepeople to transact amongst each other on the ground.
“We perfect example of the
resources in action. am confident
where they are using Imobile. We had to offer
It has also transformed payment of public
that these women, who have taken
this innovation,” Matsekesa said.
transport and solved the associated problem
initiative 103 per cent mobile penetration in of shortages of change.
“The not only to start their
United to Matsekesa, the key to the
own businesses but to contribute
Zimbabwe provided good breeding ground
AccordingStates Ambassador Bruce Wharton
to EcoCash to tap into,” he said, particularly mobile money service is that it holds real
for the Zimbabwean economy, will
make impact the future of the Commerce.
women are given an opportunity to
combined with the speed, security and cost potential in solving the issue of financial
Zimbabwean economy.”
Barbara Rwodzi, CEO of House succeed, they will do so,” she said.
problems surrounding traditional means of exclusion – a key development goal in the
Similar AWEP chapters have of BarRue Knitwear, a successful
“AWEP believes in expanding
transferring cash.
country – as its simplicity allows for roll out in
been established in countries such business that exports handmade women›s role in shaping national
never
as However, and Zambia. provider garments,even the most chairperson business climates and leading
Nigeria the service Sylvia
is founding rural locations.
anticipated the scale Pan EcoCash’s of the AWEP chapter in Zimbabwe. inthe way in has
of African uptake
“We believe leadership
innovation social reform. We
Banda of Zambia,
across Zimbabwe, and expected expect it to to transform through the will translate into
did not to She visited the U.S. lives which aim to transform Zimbabwean
AWEP Chairperson, is
have such an impact.
financial in 2012. Humanipo.com
attend the launch ceremony which AWEP exchange inclusion.” -“The communities through business
will also be attended by senior main theme for the launch and the achievements.»
E
AWEP was established in
July 2012 by the United States’
Department of State through
international exchange programs
involving American and African
women.
The program identifies and builds
networks of women entrepreneurs
across sub-Saharan Africa who own
and run small and medium scale
businesses.
Since its establishment, four
Zimbabwean
women
have
participated in the program and
form the core of the group that is
establishing a Zimb abwean chapter.
They, along with four other
participants from other U.S.
exchange programs such as the
Fortune/State Department Global
Women’s Mentoring Program, form
the founding committee for the
chapter.
Participants to the AWEP
exchange programs travelled to the
U.S. for three weeks where they
met business leaders, policymakers,
companies and industry associations,
non-profit groups advocating for
women›s economic opportunities,
and
multilateral
development
organizations.
The annual exchange program
coincides with the Africa Growth
Opportunity Act (AGOA) Forum
when held in Washington, DC, and
is designed to help the entrepreneurs
build business alliances, develop
advocacy and communication
skills, network, identify resources to
advance women›s entrepreneurship,
and take advantage of opportunities
for US partnerships through
AGOA.
Trade between Zimbabwe and the
United States continues to blossom
with Zimbabwe recording a trade
surplus in seven of the last nine
years. According trade data from
the United States Department of
Commerce, Zimbabwe imported
US$53 million worth of goods from
the United States while the United
States purchased US$52 million of
goods.
For more information please
contact the AWEP chairperson,
AWEP offices, 34 Lawson
Avenue; Milton Park; Zimbabwe,
Tel. 08644110932 or visit www.
awepzim.org Twitter : @
awepzim