Zvamaida Murwira Senior Reporter
GOVERNMENT should start by funding viable companies in its quest to resuscitate industry as pouring all resources into distressed companies may not achieve the intended short to medium term results, legislators heard yesterday. Appearing before the Parliamentary portfolio committee on Industry and Commerce, the Zimbabwe National Chamber of Commerce said funding distressed companies would not help kick-start the economy because funds would just be used to finance debts when much more could be realised from funding production.
ZNCC Chairperson on Macro Economic sub sector Mr Brains Muchemwa said one way of dealing with low capacity utilisation in industry was to finance those firms that were still on their feet.
The committee, chaired by Marondera Central MP, Cde Ray Kaukonde (Zanu-PF) had invited captains of industry to seek their input on strategies to improve productivity.
“Our position as ZNCC is that companies that are distressed to some extent are beyond redemption. What is important now is for the Government to focus on companies that are still viable, that are still on their feet. Most of these companies that are distressed, in as much as there might be other factors that might have forced them into distress, you will find that for most of them to some extent, it’s an issue of mismanagement, or they accessed a lot of debt in the market and they are failing to repay it,” said Mr Muchemwa.
“Creating a fund for distressed industries will not do anything other than allowing these companies just to refinance their existence and remain where they are.”
ZNCC, said Mr Muchemwa, was aware that Government did not have fiscal space to raise money but should funds become available, it would be futile to finance struggling firms.
“But should that money miraculously become available, we urge the Government not to look at distressed industries but companies that are functional, with a higher multiplier effect on the economy,” he said.
Mr Muchemwa cited Cold Storage Company as an example, saying it was saddled with a US$16 million debt but needed US$3million as working capital meaning that the firm would require US$19 million to retire its debt and fund operations.
Government has in the past set up a Distressed Fund aimed at reviving companies mainly in Bulawayo that went down due largely to the debilitating effect of sanctions.
Mr Muchemwa said labour laws needed to be fine-tuned because they were presently skewed in favour of workers.
In terms of the current labour laws, he said, an aggrieved worker could approach the court and secure an order to attach equipment whose effect would be to prejudice hundreds of workers who depended on it.
Mr Muchemwa said it was easy to hire but would be an uphill task to lay off an employee.
“We have minimum wages that are not linked to productivity,” he said.
Other issues he cited as requiring attention were confidence in the market, national debt, property rights, access to funding, interest rates, taxation levels, central bank recapitalisation.
He stressed the need to give title to land holders.
Masvingo Urban MP, Cde Daniel Shumba (Zanu-PF) said there was need to cleanse the central bank as part of measures to create confidence in the market.
Yesterday’s event was also attended by ZNCC president Mr Hlanganiso Matangaidze and his deputy Mr Davison Norupiri.