RBZ blamed as Dunlop Tyres shuts down

RBZ blamed as Dunlop Tyres shuts down

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By Alison Musekwa

DUNLOP Tyres (Pvt) Limited, Zimbabwe’s sole tyre manufacturing firm has shut down operations throwing 820 workers into the streets.

The closure of the Bulawayo based firm is also going to result in more that 30 000 workers employed in the downstream industries losing their jobs.

Officials at the tyres manufacturer and exporter said the firm had shut down its plant last week due to shortages of foreign currency, which has resulted in the company failing to procure raw materials.

Phil Whitehead, Dunlop managing director said the company has not been receiving foreign currency allocations from the Reserve Bank of Zimbabwe (RBZ) since July 15, 2005.

The RBZ, under whose regulations all Zimbabwean exporting firms surrender 50 percent of their export proceeds, is also responsible for allocating foreign currency to industry as well as various arms of government.

“We stopped production last week and workers are at home. This is a huge disaster. You can not run an economy without tyres,” Whitehead said.

Zimbabwe, whose gross domestic product (GDP) is expected to plummet by a further 7 percent in 2005, is grappling with severe foreign currency shortages as well as bitter food, fuel and electricity shortage.

The closure is also going to hit hard various arms of government such as the Zimbabwe National Army (ZNA), Zimbabwe Republic Police (ZRP) as well as the Central Mechanical and Equipment Department (CMED), which had placed huge orders of tyres to Dunlop.

Whitehead said his firm’s plight has been worsened by an exclusive arrangement entered between Dunlop and RBZ where the tyre manufacturer undertook to surrender 100 percent of its export proceeds.

Whitehead said Dunlop last month surrendered US$687 000, its average monthly export earnings, to the central bank.

“We honoured our part of the agreement with the RBZ but they are reneging. They are using the money for food and fuel imports at our expense,” Whitehead fumed.

Zimbabwe’s agriculture-based economy has been in free fall since the government embarked on a controversial programme to seize white owned commercial farms in 2000.

Dunlop requires US$50 000 to manufacture tyres on a daily basis but Whitehead said it would cost US$100 000 to import the same tyres.
Whitehead the effects of Dunlop closing down are even worse off on the downstream industry and their customers.

“The army, police, CMED and Willowvale motor industry are some of our biggest customers and imagine the army and police operating with no tyres,” Whitehead said.

He added that the RBZ and government have virtually turned a deaf ear to their pleas for help.

Zimbabwe National Chamber of Commerce (ZNCC) president Luxon Zembe said the RBZ was affording industry only 6 percent of their foreign currency requirements.

This has resulted in companies sourcing foreign currency on the thriving black market, where rates are high, Zembe said.

“There is no sense of urgency in our politicians. The political will is not there. Industry is not getting the commitment it needs from government,” Zembe lamented.

In its latest report on the Zimbabwe economy the International Monetary Fund (IMF) projected a 7 percent decline in GDP in 2005.

The Fund said the pace of the country’s economic deterioration slowed last year but had resumed again in early 2005 due to rising inflation, foreign currency shortages and low agricultural output because of drought and a botched land reform programme.

The Zimbabwe economy has crushed by 30 percent between 19978 ad 2003.

“Without a bold change in policy direction, the economic outlook will remain bleak, with particularly detrimental effects on the poorest segments of the population,” the IMF said.
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