Experts warn that 2020 could be tough for Zimbabwe business

Next year is set to be tough for the Zimbabwe business community because of incoherent government policies and an already suffering economy, experts warn.

This year numerous businesses closed down, while those that remained are in survival mode and likely to scale down.

The most notable effect of a poorly performing economy starved of foreign currency in the last month of the year is the move by CocaCola to stop supplying Schweppes Zimbabwe with concentrate for the production of Mazoe.

Schweppes owes CocaCola US$10m.

Confederation of Zimbabwe Industries president Henry Ruzvidzo said that the biggest risk would be a run on the local currency and inflation.

Inflation has been on a wild run, which has culminated in massive pricing confusion.

Official inflation figures are not being published by the government but independent monitors peg annual inflation at 599%.

Zimbabwe Chamber of Commerce CEO Christopher Mugaga said a collective effort was needed between the government and the private sector to address the worsening economic situation.

“To say government has not done anything will not be fair, considering several pro-people policies that have been introduced, especially subsidies. It will be tough, but there is always hope,” said Mugaga.

Industry raised concerns on the funding of some subsidy programmes by the government as one of the major factors behind current distortions on the market.

The government recently went on a subsidy funding spree, which resulted in the abuse of some programmes that ended up haemorrhaging the fiscus.

Various government sources say about US$3bn was abused through subsidy programmes, including the much-touted command agriculture.

Other subsidy programmes that have come under the spotlight are procurement of fuel, grain and the mass public transport system.

The non-settlement of foreign legacy debts remains a concern that continues to frustrate industry.

Industrialists recently approached the Reserve Bank of Zimbabwe (RBZ), citing the lack of a clear plan to settle legacy debts ring-fenced by the central bank as foreign raw material suppliers have started issuing fresh threats to close the tap on them.

RBZ governor John Mangudya said in February that all foreign liabilities or legacy debts would be ringfenced.

The move, and delays in the laying out of a settlement roadmap, has posed a massive challenge to productivity as most raw material suppliers are now holding onto their products.

Some foreign suppliers, especially in the cooking oil industry, have filed notice that they will not continue supplying raw materials if a clear plan on settlement of legacy debts is not set out.-Timeslive

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