8 October 2017

Zimbabwe: Textile Sector Sings the Blues

The textile industry has been one of the hardest hit by the worsening foreign currency crisis in Zimbabwe as companies struggle to access money to import raw materials

Zimbabwe is facing a serious shortage of foreign currency, which gave birth to the black market where United States dollars are being sold at exorbitant rates.

Although the government has moved in to arrest the practice, big businesses continue to suffer as banks are unable to give them foreign currency.

government prioritises other sectors other than the textile sector despite its potential to create employment and to earn the country the much-needed foreign currency.

A snap survey by Standardbusiness last week showed that the majority of companies were likely to close shop if government failed to move with speed to contain the situation.

Doreen Eeson of Waverley Blankets said things were looking extremely bleak and their production had been greatly affected as they cannot get foreign currency for raw materials.

The company has been in business for nearly 20 years, servicing both the government and private sector.

"At least 800 families rely on us; stocks of raw materials are running dangerously low," Eeson said.

"It is very unfortunate that businesses that do not add value, such as packers and distributors are getting full allocation at the cost of genuine value adding manufacturers who cannot access foreign currency for vital raw materials such as yarn, dyes and chemicals."

She added: "We are confident that soon the government and [Reserve Bank of Zimbabwe] RBZ will come to our rescue to avert looming disasters."

Joe Vas of Twine & Cordage said things were increasingly becoming harder for those who do not fall under critical industries that the government was prioritising.

"Yes [there is that problem]. We have to generate our own foreign currency to be able to acquire our raw materials," he said.

Kingsport Investment boss Kingston Mhako said the future was looking bleak.

The company is in the business of knitting T-shirt fabric and then turning it into finished products.

"We are affected by this situation and even after export, we are failing to access money to buy raw materials. Banks are giving us a raw deal; they are turning a deaf ear on us and they are not paying attention to our needs," he said.

"In my case, I wrote letters to the bank so as to import a machine, which was going to help Zimbabwe as an import substitution, especially when we are facing elections.

"You find that most political parties end up going to China to import already made T-shirts but the machine we were bringing was going to increase production and there was no need to go and import.

"We would have had the capacity to make 10 000 T-shirts a day."

Mhako said he had reached out to banks and responsible authorities to no avail.

"Not even a single transfer is going outside Zimbabwe and we have written letters and made complains but they are all falling on deaf ears. Anything that we want to bring in is failing," he said.

"Where we are heading is very bleak compared to where we are coming from.

"Others would say we are seeing light at the end of the tunnel but we are actually seeing darkness. Every day is actually changing for the worst."

Norman Makono, secretary general of the Zimbabwe Textiles Workers Union, said thousands of employees were likely going to be affected if things remained the same.

"Actually, the employers are saying they are finding it difficult to access foreign currency to buy the raw materials.

"They are trying to engage the authorities but I think the response is slow," he said.

"Most workers have been told that if things remain unchanged, they will have to close by November or December.

"The majority were laid off but now we are fighting for those at work to remain there.

"The government must chip in and assist the sector to get raw materials from outside.

"Stocks for winter are manufactured now and if things remain the same, it then means we will have no stocks for winter."

Confederation of Zimbabwe Industries president Sifelani Jabangwe said there was need for planning ahead so that the obtaining situation would not recur.

He said there were various cycles of the economy and companies must prepare ahead, especially after the sale of tobacco to beef up their stocks.

"We are in a low period where there is no foreign currency and most companies would like to get additional allocations because this is when you will be making your purchases for Christmas, but at the same time there is no foreign currency on the market so the facility from Afreximbank is now required.

"When you talk to companies, everyone is really requiring cash flows."

Industry and Commerce permanent secretary, Abigail Shonhiwa said the ministry had deployed teams to carry out an assessment and would comment comprehensively after getting feedback from the teams.

"I am not in a position to give you a response right now. I will need to get information because we have teams that are carrying out that exercise and we are waiting for their report," she said.

"If I give you the report now, it will be inaccurate. This is a continuous exercise but we are expecting a report of the situation by end of day Friday."

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