Zimbabwe companies fail to open for business after festive break

HARARE – Several of Zimbabwe's struggling companies have failed to open for business in the New Year, the victims of the country's unending economic crisis. A snapshot survey report says the hardest hit firms were those which did not generate foreign currency through export sales, and were therefore unable to pay for their foreign inputs.

Paul Nyakazeya, an award winning business journalist, told IRIN the hardest hit firms were those which did not generate foreign currency through export sales, and were therefore unable to pay for their foreign inputs.

“The companies that were trading using foreign currency have not had any problems opening for the new year because after the economy was dollarised, they were able to remain afloat because they could procure what ever requirements they needed using ready cash,” Nyakazeya said.

“On the other hand, companies in the textiles industry and the mining sector scaled down operations or did not open because they could not access foreign exchange from the RBZ [Reserve Bank of Zimbabwe], which has given priority to agro-based industries.”

Gold mines especially were in trouble, and had either closed or operating at a “depressed capacity”, because of the RBZ’s failure to pay them for gold exported under the Foreign Currency Retention Fund, in which up to 75 percent of gold exports should be paid by the RBZ in foreign currency.

Nyakazeya said some of the companies had adopted a "wait and see" attitude, hoping that deadlocked political talks involving the main political parties would end with a solution to the country’s collapsed economy. Zimbabwe has an unemployment rate of 80 percent.

On the fence

The Morgan Tsvangirai-led faction of the opposition Movement for Democratic Change (MDC-T) is due to meet on 18 January to decide whether to join a government of national unity. It has accused President Robert Mugabe of clinging to power rather than resolving the impasse around last year’s deeply flawed election, in which MDC-T won a parliamentary majority, but Mugabe romped home in a violence-marred presidential contest as the sole candidate.

“Some businesses are just sitting on the fence waiting to see how political developments unfold before taking a decision on their investments," said Nyakazeya.

Zimbabwe has witnessed a wholesale dollarisation of the economy after the RBZ last year authorised some businesses, including retail outlets, to conduct transactions in foreign currency. A shortage of local currency and a world record inflation rate has encouraged the transformation.

According to economic analyst John Robertson, “The whole process is tied to many failed economic policies, including the one in which the RBZ forced banks to lodge foreign currency with them, but spent it on government projects and failed to release the money to companies who wanted it to buy raw materials and for operational costs.”

On strike

The Zimbabwe Congress of Trade Unions (ZCTU), the main labour federation, has launched a campaign to have workers paid in foreign currency rather than the ever-eroding Zimbabwe dollar, which now boasts a Z$50 billion note

“The government has lost faith in its own local currency, so why does it expect the workers to have faith in a worthless currency which they do not respect?” ZCTU president, Lovemore Matombo, commented.

“Workers in Zimbabwe are being forced to pay rentals and transport fares and even school fees in foreign currency … Our position is that given that the shops are now selling their goods in foreign currency, workers have no option but to demand that all wages and salaries be paid in foreign currency.”

Doctors and nurses have been on strike for four months demanding a dollar-based salary. Teachers have also taken industrial action with the same goal.

''The government can open the gates to schools and classroom doors, but there will be no teachers because they would either be on strike or have left to try other options''

The postponement of the start of the school year for two weeks by the government has underlined the extent of the crisis in the education sector. The new term was supposed to begin on 13 January but has been delayed until 27 January. 

Education permanent secretary, Stephen Mahere, announced that the decision “has been neccessitated by the need to facilitate completion of the 2008 public national examinations involving a significant number of teachers”.

The delay in releasing the results of the key Grade 7 exams prevents final year primary school pupils from graduating to secondary school. The results for Ordinary-Level examinations are also not yet out, which determines whether students can proceed to Advanced Level.

Happy Ndanga, an official with the Zimbabwe Schools Examinations Council, told the official Herald newspaper that "marking of the exams was completed weeks ago, but the results are currently being captured".

Raymond Majongwe, the secretary general of the militant Progressive Teachers Union of Zimbabwe, told IRIN that the government was in denial, refusing to acknowledge it had run one of Africa’s best education systems into the ground.

"The truth of the matter is that public examinations marking has not been completed because teachers have been on strike and refuse to be paid peanuts for teaching pupils and marking public examinations. As a result of the poor working conditions, more than 35,000 teachers out of a national complement of about 113,000 left their jobs in 2008 because it did not make sense to continue to provide their labour for free."

Majongwe predicted that even if schools reopened on 27 January, most classrooms would be empty.

"The government can open the gates to schools and classroom doors, but there will be no teachers because they would either be on strike or have left to try other options. The government can bring in the militia and the military, but that will not improve the quality of education."