Economic crisis hits business

David Lasker, a managing director of a clothes manufacturing company in Bulawayo, Zimbabwe, is an angry man. His company, Archer Clothing employs nearly 800 workers who he says he might have to retrench and close his business because of his inability to continue operations.

Lasker told IRIN: “We are sitting on an order of about US $250,000 from a British client to supply jerseys. The jobs of about 250 workers depend on this order. We approached the finance ministry to exchange our Zimbabwean dollars for foreign currency to buy raw materials from South Africa.”

Lasker said the ministry told them the government has no foreign currency, and could therefore not help them. What makes Lasker angry, he says, is that the loss of contracts will force his company to reduce staffing if the situation does not improve soon. “Should our workers lose their jobs, more than 4,000 of their dependents will face a bleak future.”

“It has become almost impossible to carry on normal operations because of the government’s seemingly “don’t care” attitude of what happens to the economy,” Lasker said, adding that his company’s predicament is only one example of the situation facing Zimbabwean businesspeople.

According to Lasker, Zimbabwean importers, exporters and manufacturers across the whole economy face bankruptcy because of the foreign exchange crunch. “Small and big businesses who have to import and export raw materials and goods cannot get foreign currency to carry on their normal businesses. Many of these will go bust very soon.”

Eric Bloch, a Zimbabwean economist, told IRIN on Friday that the immediate effects of the foreign currency shortage and the three-month fuel crisis are immense. “Tourism, which earns the country a significant amount of foreign currency, has dropped by up to 50 percent since the fuel crisis started in December,” Bloch said. He said the uncertainty of their ability to travel within the country has discouraged tourists from visiting.

Bloch said the agricultural sector, the country’s mainstay, is under pressure as the planting season should have started. “Fuel shortages have hampered the preparations of fields for the planting season, while industries cannot obtain raw materials because of foreign exchange shortages.” Bloch claimed that recovery efforts in the flooded areas in the southern and western parts of the country have been slowed down by the lack of fuel.

Massive lay-off, unpaid leave and a shorter working week are already being implemented by companies because of the fuel and foreign exchange crunch, said Bloch. He added, however, that he does not foresee immediate company closures and retrenchments. “Many employers are implementing crisis management strategies with the hope that the situation might be brought under control after the parliamentary elections scheduled for April.”