27 March 2016

Zimbabwe: Churches Take Over As Bulawayo Industries Die

A large, colourful new banner of Emmanuel Makandiwa's United Family International Church (Ufic) is mounted below the company's falling signage.

Ufic has now taken over the factory that was once a source of livelihood for hundreds of Textile Mills workers and their families and trasformed it into a house of worship.

This has become common place in Bulawayo's once vibrant industrial areas where churches have taken over factories of many a closed company in this city.

A drive in the industrial areas -- Kelvin, Belmont and Thorngroove -- confirms this curious scenario.

Church organisations have converted company premises into halls of worship as efforts to revive the city's industry have clearly failed.

The story is the same in the central business district where Pentecostal churches have taken over vacant premises, converting them into halls of worship.

This is the story of what used to be the country's industrial hub, which is now on its death bed. Close to 100 firms have closed down or relocated from Bulawayo in the past decade, spawning job losses.

Companies have gone under due to the absence of affordable long-term capital for retooling, influx of cheap imported products and water and electricity shortages.

Bulawayo companies that have gone under include True Value, Label Fashion, Suntosha Leisure Wear, Lancaster, Harren Manufacturing, Ascot, Belmor Fashions, Cinderella, Textile Mills and Rusglen Fashions, to name a few. The list of struggling companies include, among others, the National Railways of Zimbabwe (NRZ), Merlin and National Blankets [both under judicial management] and Dunlop.

Bulawayo-based economist Reginald Shoko said the city's industries were in dire straits.

"Industries in Bulawayo are operating at slightly above 35% capacity utilisation [and] most of these industries downsized years ago and there have not been any significant developments of late," Shoko said.

He said some of the companies could not be revived to their yesteryear glory due to either technological developments or global competition.

"I strongly believe some of these industries must provide toll manufacturing services to other foreign companies and in some cases, they should find partners from foreign industries to try and utilise the available resources on their own. I don't see the light," Shoko said.

"But generally, there is still hope in the engineering, clothing and farming-related industries due to the local demand for these products.

Industrialists and analysts say government should use Treasury Bonds to raise cheap long-term funding for key industries in Bulawayo.

"The issue of Treasury Bonds to raise money might work, especially when there is no money, as is the case in Zimbabwe now.

"Those bonds should be used to resuscitate industries," said businessman and industrialist Delma Lupepe.

He said many companies were using obsolete machinery and short-term funding was not the solution.

Government has in the past introduced facilities such as the Distressed and Marginalised Areas Fund (Dimaf) and the Zimbabwe Economic Trade Revival Facility to help companies recapitalise.

However, most of the companies that got money from Dimaf remained in doldrums as the loans were of a short-term nature, very small and had punitive interest rates.

Zimbabwe National Chamber of Commerce first vice-chairperson, Sisa Sibanda, said besides special economic zones, bold policy reforms were needed to revamp the economy so that the country could regain investor confidence.

She said there was need for a development of a model for the small-to-medium enterprises (SMEs) which would unlock the potential of those SMEs, like what happened in China, Bangladesh and Rwanda.

"Partnerships and potential funding to equip industries with new machinery and technology can also work," Sibanda said.

Former Finance minister Tendai Biti said Bulawayo was lagging behind by 20 years while Harare itself was 40 years behind normal African capitals.

"The idea is to create jobs so that there is full employment in Bulawayo. Let's resuscitate the industry as Bulawayo is an industrial town and so let's get those industries kicking again," Biti said.

Addressing delegates at the Investment and Trade Initiative meeting in Bulawayo recently, Industry and Commerce deputy minister Chiratidzo Mabuwa said NRZ remained key to the revival of Bulawayo industries.

"The most important starting point in this region is the revival of NRZ. The NRZ is the lifeline of industry as it is the cheapest mode of transporting goods," she said while inviting investors to come on board and partner with the NRZ through joint ventures.

However, amid Bulawayo's industrial woes, promising signs have started to emerge.

Some notable businesses in the city, such as United Refineries and National Blankets Limited, have started showing signs of recovery, as is the case with Archer Clothing, which has brought hope to the city's textile industry.

Archer was placed under judicial management five years ago after failing to raise working capital and slipped into provisional liquidation in 2014, before Paramount came to the rescue.

United Refineries has pushed capacity utilisation to over 75%, according to chief executive officer Busisa Moyo. Before 2009, the company was operating at below 50% of capacity.

Sibanda said there was hope that companies in Bulawayo could be revived. She said Bulawayo was strategically positioned as a result of the Trans Limpopo Valley/Spatial development zone and it was ready to be declared a special economic zone.

"Once declared and with an inflow of investment coming into the economy, that will create a multiplier effect that ought to create healthy economic activity," she said.

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