87 companies shut down in Zimbabwe in 2014 as economy worsens

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Award-winning Zimbabwean writer Chenjerai Hove has called on Grace Mugabe, the wife of Zimbabwe?s leader Robert Mugabe, to hand back her PhD.
Award-winning Zimbabwean writer Chenjerai Hove has called on Grace Mugabe, the wife of Zimbabwe?s leader Robert Mugabe, to hand back her PhD.

Zimbabwe’s deteriorating economy has resulted in rising company closures, with latest statistics from its central bank showing a total of 87 companies shut down last year, up from 44 in 2013.

Award-winning Zimbabwean writer Chenjerai Hove has called on Grace Mugabe, the wife of Zimbabwe?s leader Robert Mugabe, to hand back her PhD.
Award-winning Zimbabwean writer Chenjerai Hove has called on Grace Mugabe, the wife of Zimbabwe?s leader Robert Mugabe, to hand back her PhD.

The number of companies placed under judicial management also rose from 51 in 2013 to 60 by end of last year, the central bank said in its quarterly economic review for December 2014 released this week.
Citing data from the Master of High Court, the Reserve Bank of Zimbabwe said the number of companies in distress was also increasing, rising from 48 in 2011 to 128 in September 2014.
Firms are suffering from lack of lines of credit for working capital and retooling.
“A significant number of companies are also failing to pay their staff on a regular basis, accumulating salary arrears, further adversely impacting on aggregate demand,” the central bank said.
It stated that 3, 881 workers were sacked in 2014, up from 2, 376 in 2013, as firms downsize and restructure in the harsh economic environment.
A total of 13, 647 workers were dismissed between 2011 and September 2014, the central bank added.
The central bank attributed the company closures to a number of economic bottlenecks such as the liquidity crunch and the attendant lack of credit, obsolete equipment, low aggregate demand, cheap imports and non-performing loans which are discouraging banks from lending to productive sectors of the economy.
Foreign direct investment, which has a positive impact on market liquidity, has remained subdued due to the perceived country risk and thus contributing to company closures in the country.
The country’s net foreign direct investment decreased to 300.6 million U.S. dollars in 2014 from 373.1 million dollars in 2013. Enditem

Source: Xinhua

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