According to Engineering Iron and Steel Association President, Callisto Jokonya, companies are forced to import steel from neighbouring countries. He was quoted by the Sunday Mail as saying that “conditions are very difficult as 17 companies have closed shop, which is a cause for concern, but government has failed to give attention.”
"We are operating at below 10 percent capacity and more companies are likely to close operations in the next few months,” he said.
Jokonya reportedly also urged the government to explain the current state of the ZISCO/Essar deal, which is yet to be finalised.
“The failure to resuscitate ZISCO has negatively impacted the sector considering that it used to employ 50,000 workers who are currently out of employment and government continues to dilly-dally with the lives of citizens,” he said.
A failure to promote new investment in the industry is also being blamed for the situation, which has added to Zimbabwe’s estimated 90% unemployment rate.
The investment climate meanwhile continues to suffer as a result of the indigenisation drive, which is blamed for driving potential investors away. The campaign requires foreign-owned companies to cede 51% of their shareholding to Zimbabweans, and it is likely they will not be compensated for this if the Empowerment Ministry successfully changes the current legislation.
New figures supplied by the Zimbabwe Investment Authority unsurprisingly show that Foreign Direct Investment (FDI) has dropped by more than 70% this year, compared to the same period in 2012.
This drop, from more than US$130 million to just US$33milion, also comes as the government continues to target some firms in the form of plans to seize their land. Last Friday the government restated its intention to seize almost half the land owned by mining firm Zimplats, despite that group filing an objection to plans.
The government is also planning to seize over 1,000 hectares of land that belongs to the CFI Holdings owned Crest Breeders International chicken group, which will be acquired for “urban development.” The government earlier this year has also successfully seized almost 1,600 hectares of land from the Mazoe Citrus Estate, owned by the agro-producer Interfresh.
Political analyst Clifford Mashiri told SW Radio Africa said these developments means investors are running scared of Zimbabwe “because there is no guarantee that their investments will secure.” – SW Radio Africa
Post published in: News