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Posted on Wednesday, 18 July 2012 14:56

Zimbabwe: Bulawayo's factories shut up shop

By Thabo Bhebhe in Bulawayo
Dunlop is one of the few companies still manu- facturing in Buluwayo, where 87 factories have closed/Photo/TSVANGIRAYI MUKWAZHICheap Chinese imports and a liquidity crunch have decimated Bulawayo's once-thriving manufacturing sector.
 
Bulawayo used to be called the Manchester of Rhodesia. Zimbabwe's second city, it was an important industrial centre, home to Merlin, Dunlop Zimbabwe and National Blankets.

Now Bulawayo Belmont Industrial zone is all but closed for business. A study by the industry and commerce ministry revealed that 87 Bulawayo companies have shut down since the formation of the inclusive government in 2009.

Nineteen of the firms manufactured clothing and textiles, 63 were in the motor industry and three were in the construction sector. More than 20,000 workers are now unemployed because of the closures.

Harven Manufacturing – Bulawayo's sole lingerie manufacturing company, which has been in business since 1952 – closed shop in March.

The companies lucky enough to survive the economic recession are operating far below their installed capacities, and several firms have halved working hours. "Bulawayo is a ghost town," said Prime Minister Morgan Tsvangirai during a visit to the city in late April. Archaic equipment and high electricity costs are some of the challenges facing manufacturers.

Economist Eric Bloch blames a liquidity crunch and the influx of cheap Chinese imports. "In the past decade, credit lines have been shrink- ing. This led to several firms relocating to Harare to access the funds," Bloch told The Africa Report.

To reverse the trend, the government put $40m into the Distressed and Marginalised Areas Fund in October 2011. By mid-April, the Central African Building Society, the financial in- stitution mandated to oversee the funds, had disbursed just $3.9m to 10 firms.

Waste of funds

The Confederation of Zimbabwe Industries (CZI) says reviving the industrial zone is a waste of funds. "The same companies being resuscitated will at some point have to shut down again since it doesn't make business sense to operate factories producing expensive goods when there are cheaper alternatives," says Joseph Kanyekanye, CZI president.

"We have opened too much of our markets to foreign players. How do you justify im- porting canned food?" Kanyekanye adds. "The reality is that you cannot continue to think locally and compete globally."

Industry and commerce minister Welshman Ncube says Zimbabwe's twin Industrial Development Policy and National Trade Policy (2012-2016) should help revive the sector.

The NTP aims to promote diversification of the country's export basket and increase export earnings by 10% annually from $2.5bn in 2010 to $4.5bn in 2016.



Last Updated on Friday, 20 July 2012 09:32

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