FINANCE, Economic Development and Investment Promotion minister Mthuli Ncube
FINANCE, Economic Development and Investment Promotion minister Mthuli Ncube has dismissed the rate at which firms are struggling or exiting the market, citing that local investors could close the gap amid an increasing number of businesses entering corporate rescue or exiting Zimbabwe.
The response from the minister comes as companies such as Botswana retailer Choppies Enterprise Limited (Choppies) and British multinational professional services and fast-moving consumer goods firms, PricewaterhouseCoopers International Limited and Unilever plc, respectively, announced their exits from Zimbabwe last year.
Further, firms like cement manufacturer Khayah Cement Limited and clothing retailer Truworths Limited entered corporate rescue in December and August 2024, respectively.
The exits and corporate rescues are owing to a plethora of economic challenges such as the ZiG’s growing volatility, policy inconsistencies, shrinking disposable incomes, failure to remit funds outside the country, and high taxes, among other macroeconomic challenges.
Ncube held a Zoom meeting during the ongoing World Economic Forum being held in Switzerland on Wednesday, where he expressed his satisfaction with local companies showing their capability to invest in firms that exit Zimbabwe.
He stated that this development showed that the country was not lacking in local investors.
“You do already have local investors who are ready to take over those companies. You saw it with the audit firm that exited. Local partners took over the practise, and they continue to practice,” Ncube said.
“I was very pleased with that, and then also, if you look at a company like Choppies, for example, a local investor is again taking over the assets. They continue operating the company.”
The local investor being referenced is Industry and Commerce deputy minister Raj Modi, through his business Sai Mart that has taken over Choppies local unit.
“So, it looks like we are not short of local investors who are ready to step in place of some of these foreign investors,” Ncube said.
He added that despite local investors making their way into businesses to fill the gap left by foreign companies, there was a need to develop solutions to the challenges faced by businesses in Zimbabwe.
“We will always continue to make sure that we deal with the challenges that generally businesses face to improve the environment for doing business,” the finmin said.
“We continue to work on that to make sure that we attract new investment as well as encourage expansion by those who are already on the ground.”
Ncube noted that one of the challenges being faced by retailers such as OK Zimbabwe and Choppies was smuggling, though retailers have cited exchange rate volatility as the primary difficulty they face.
“The issue of retailers who are struggling (is) the reason why we have launched the blitz on smuggling. One of the things that retailers have told us about is that smuggling is hurting their businesses. Manufacturers are also feeling that this is hurting their businesses,” Ncube said.
“So, we have had this blitz on smuggling to make sure that we slow down this illicit behaviour.”
Regarding liquidity, Ncube noted that excess ZiG in the market could undermine the currency, hence the government’s tough stance to greatly limit the domestic currency from circulating in the economy.
“Why we have maintained a very tough stance on the liquidity front was just to maintain the stability of the ZiG, making sure that we don’t have excess money supply or excess liquidity, which undermines the stability of the ZiG,” he said.
“The stability of the ZiG is critical for planning by companies, by the government, in terms of budgets. It’s also critical for just preserving the purchasing power of the currency.”
However, experts have warned that this move only delays the ZiG’s devaluation while the liquidity crisis has hampered the business community’s ability to seek out capital thus hurting operations.
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