There is a panic in the corridors of Zimbabwe’s market system following a recent suspension of bank loans by the government.
A number of companies have also suspended advance payments with immediate effect introducing an operation on a cash or prepayment basis.
Tongaat Hullet the Zimbabwean agriculture and agri-processes business which focuses on sugarcane production wrote a letter to farmers alerting them that they cannot continue offering advance payments following a recent suspension of lending by banks.
Surrey Group which is also Zimbabwe’s largest privately owned, integrated beef and chicken abattoir also wrote a letter to their customers informing them that they are no longer able to operate using credit facilities. Fivet Animal Health also updated its ZWL credit offering following the RBZ announcement.
Wholesale Beef also updated their customers that they will no longer be able to provide credit terms for any purchase made in ZWL and they will review the USD credit limit and terms and all account purchases going forward will be in USD accounts.
The market also works similarly as companies require working capital facilities to restock, increase capacity utilisation and smoothen their cashflows, therefore prohibiting access to funding will undermine operations, and curtail growth, resulting in shortages of goods and price escalation.
Meanwhile, the Confederation of Zimbabwe Industries, CZI yesterday called for concrete action to stem the economic “bloodbath” that has been precipitated by currency depreciation and exchange rate volatilities.
CZI president Kurai Matsheza’s call for action came as a new survey revealed that firms ramped up output last year, with industrial capacity utilisation rising to 56,24% last year, from 47% in 2020. He said business was worried that the government was procrastinating when the crisis was spiralling out of control.
“It would be remiss of me not to talk about the current crisis which is both a currency crisis and probably also a solutions crisis,” Matsheza said.