20+ Companies Failed To Open Doors In 2020 As Economic Turmoil Accelerates
More than 20 companies failed to reopen after the festive season, leaving at least 500 workers in the lurch, businessdigest has learned.
This comes at a time the economy is facing serious headwinds which include prolonged power cuts of up to 18 hours, depressing production at less than 40% capacity, fuel and foreign currency shortages and year-on-year inflation which has galloped past the 500% mark.
Zimbabwe Federation of Trade Unions (ZFTU) secretary-general Kenias Shamuyarira told business digest this week that 22 companies have failed to reopen their doors after the Christmas holidays as the deepening economic crisis takes its toll.
“We have quite a number of companies who have failed to reopen after the festive season. There are about 22 companies which have failed to reopen which in total employ more than 500 people. This is due to economic difficulties,” Shamuyarira said.
He said although some of them had closed shop, others are still sitting on the fence as they assess the situation on the ground particularly around power outages which have crippled the operations of most business entities.
Shamuyarira pointed out that most of the companies that have failed to reopen are from the manufacturing sector. Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo said they are still in the process of collecting information on the number of companies that did not reopen their doors after the festive holidays.
However, he pointed out that, in a bid to cut on costs, companies have resorted to telling their employees to go on leave to reduce the number of leave days they have.
In an interview, CEO Africa Roundtable chairperson Oswell Binha revealed that they are also in the process of gathering information on the number of companies that did not reopen after the Christmas holiday.
“The CEO Africa Roundtable is currently undertaking an evaluation of how many companies have failed to open shop by January 2020,” Binha said this week.
“Company operations affected to near-closure by the 18-hour load shedding, absence of key enablers, hyperinflation and low aggregate demand are increasing with some opting to institute care-and-maintenance to reduce operational costs.”
Economist Godfrey Kanyenze warned that more companies could be forced to close shop if there is no change to the turbulent economic environment.
“As long as there is no sign of any change for the better, the situation on the ground will not improve,” Kanyenze said.
“With fuel shortages and power outages getting worse, how do you get a positive vibe? Put yourself in the position of those companies who have to run their businesses with various equipment on generators. What is needed is a holistic approach that deals with politics. The political bickering indicates that nothing has changed.”
Labor market analyst and former Employers’ Confederation of Zimbabwe (Emcoz) executive director John Mufukare said the failure by companies to reopen in the New Year signals worsening economic decline.
“I am not in the least surprised by this development,” he said. “We are going from bad to worse and you do not need to be a rocket scientist to see that.”
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