MINERS and industrialists have warned of more firm closures, job losses if government proceeds to enforce an unpopular directive for large consumers of energy to scale down consumption by 25 per cent.
Shock power outages have seen government clutch at thin straws; first pronouncing a ban on electricity geysers and, lately, a directive to industrialists and security cantonments to load-shed.
The bearer of the upsetting news was none other than energy Minister, Samuel Undenge who told parliamentarians Tuesday the power austerity was aimed at easing the worsening crisis.
But Confederation of Zimbabwe Industries President, Busisa Moyo said Wednesday government would not have opted for a more apt method to destroy a sector already battling myriad challenges.
“The festive season, October to December, is the busiest period in terms of production throughout the whole year,” Moyo told NewZimbabwe.com.
“So to withdraw power at this time is really mis-timed. It will affect GDP; we are likely to see shrinkage in the economy.”
The CZI chief said local producers are already struggling to mitigate the effects of a weakening rand, liquidity crunch and a local consumer base that is cutting back on expenditure because of its employment uncertainties.
As of Wednesday, Moyo said, the country’s business confidence index stood at a minus 33 per cent.
The index is a global template recently adopted by local business to gauge the business mood among executives with the highest score being 100 and lowest being minus 100.
Moyo added: “We don’t want to be alarming but we see the situation as not very impressive.”
In the face of such adversity, the natural response of business is to pass the burden to the consumer.
But Moyo said it was foolhardy to take the option because of the threat posed to local industry by a cheap imports from South Africa.
“We are facing competition from cheap rand imports, with a weak rand, so now if you try to raise the price of, say, cooking oil, people are going to import.
“You start making losses, fail to pay your debts and closure is imminent,” he said.
Retailers also struggling
Similarly, Confederation of Retailers Association of Zimbabwe (CRAZ) President, Denford Mutashu lamented the group’s narrowing options adding that a further squeeze caused by the outages may tempt dealers to dump local producers for cheaper foreign products.Advertisement
“Retailers survive from the goods that they get from a firing industry and, when industry is faced with this challenge, we might also run into a number of challenges in terms of procuring especially local products,” Mutashu said.
“We might even see an increase in imports vis-a-vis the current rand instability that might actually increase the appetite to import rather than to procure from the local industry.
“Already the cost of production from the local industry was always high anyway, forcing local products to be higher than the imported line.”
Mutashu said a lot of their units such as perishables and bakery equipment run on electricity and this may force a reduction in procurement.
“A generator economy is not sustainable,” he quipped, adding that retailers also have no “latitude” to hike prices because of the imports threat.
Elsewhere, it is reported that mining firms have sent an SOS to government appealing for immunity from the unpopular directive which they contend would trigger more job losses, mine closures, loss of production and missed growth targets.