Crisis as companies respond to Mnangagwa’s measures in kind

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By Alois Vinga, Own Correspondent

THE sweeping economic measures employed this week by President Emmerson Mnangagwa have triggered adverse responses from various companies, with some cutting off credit facilities and others rejecting Zimbabwean dollar payments.

Mnangagwa directed all the banks to stop lending, alongside other measures in what he described as a holistic approach to address rampant market abuses being peddled by economic hitmen.

But despite assurances by the government indicating that these are just short term measures aimed at sanitising the markets, most companies have already begun to implement harsh measures which range from  dollarizing their services, cutting off credit lines and in some instances temporarily ceasing operations.

A letter written by animal health firm Fivet finance director, Jeane Ellis directed to Brighton Piggery said all credit accounts will be migrated to the US dollar owing to the rapid depreciation of the local currency.

All purchases in Zimdollars would be settled on a cash upfront basis, with a requirement for the funds to be reflected in the company’s bank account first before the product is released.

Ellis informed all customers that all the US dollar credit limit terms would be reviewed and communicated in due course.

“We are kindly requesting that all current outstanding balances on the RTGS accounts be cleared before the end of day Monday 16 May 2022,” the letter reads.

“Any balances after this date will be moved to your US$ account at the rate that was prevailing on the date will be moved to your US dollar account at the rate that was prevailing on the date the invoices were issued,” said Ellis.

Tongaat Hullets chief operating officer, James Bowmaker, also informed stakeholders in a public notice that sourcing for raw materials had become a challenge due to loan suspension.

“It is with regret that the millers advise of the immediate suspension of advance payments until further notice,” Bowmaker said.

“We normally fund the advances from loan proceeds that we access from the banks. Following the recent suspension of lending by banks we find ourselves unable to continue offering advances,” he said.

Dairiboard Zimbabwe limited also informed shareholders that it will not be declaring a dividend as had earlier been communicated as it was suffering severe knocks from the ban.

Wheat farmers also expressed concern over the shortage as well as the exorbitant price of fertilizer, a development which the growers fear might reduce this year’s crop hectarage target.

The country is targeting 400 000 metric tonnes of wheat production this season. The target is based on the crop’s last year‘s 36 percent production growth last year.

Vice president Commodities of Zimbabwe Commercial Farmers Union (ZCFU) Innocent Winston Babbage also complained about high wheat farming related costs such as fuel, labour, herbicides, ploughing and shelling.

“Although government is availing inputs under the command of agriculture, fertilizer availability and pricing seems to be a problem at present but l hope we overcome this issue,” said Babbage.

A bag of one compound D fertilizer is selling at US$39 while the same bag of Ammonium Nitrate costs US$360.

“As for me, it means I need about US$ 594 to buy fertilizer alone for only a hectare. There are also other costs like labour, fuel, herbicides and ploughing,” he said. The ZCFU vice chairperson also urged the government to pay farmers in foreign currency saying the current payment of the local currency is not sustainable.

“The government wants farmers to produce and pay them    in RTGs yet they pay the same imported product in USD .In this scenario the playing field is not even. We would like a win situation similar to that of gold miners. Farmers are always short-changed,” he said.

Some of the wheat farmers who spoke to also lamented the recent government’s banning of lending by banks saying the move will impact heavily on the wheat production.

“The ban means banks will not be able to finance irrigation wheat production this season. This will eventually lead to the scarcity of wheat related products such as bread,” said Norman Machona, a wheat farmer.

Schweppes also moved to suspend all the debtors’ wholesale accounts owing to the impact of the latest measures.

In a statement Wednesday, ZCTU secretary general, Japhet Moyo also criticised the manner in which the measures were implemented.

“We are concerned about the nocturnal announcement of these measures without any social dialogue which goes against the letter and spirit of the TNF.

“The ZCTU is also concerned that some of these measures might further weaken the already weak confidence and trust in the local currency and economy in general thereby threatening the few remaining formal sector jobs,” said Moyo.