ONSDALE Enterprises, one of the country’s major sanitary wear manufacturers is on the verge of shutting down ― and sending 140 workers home ― due to the shortage of foreign currency to import raw materials, a company executive has said.
Company closures continue to drive Zimbabwe’s unemployment rate, estimated by independent economists to be about 90 percent, higher.
A Confederation of Zimbabwe Industries (CZI) manufacturing sector survey published last week, in partnership with The Financial Gazette, showed that about 30 percent of firms in the sector were on the brink of collapse due mainly to the foreign currency crunch.
Onsdale, which makes the “Farai” brand of sanitary wear and toilet paper, among other comfort products, was set up in 2004 after a US$2,3 million investment.
The industry imports as much as 75 percent of its raw materials.
“We are going to close, we are left with only three weeks’ supply of raw materials,” Onsdale sales and marketing manager, Paddington Mupfururirwa, told reporters on the sidelines of an exporters’ conference held in Harare last week.
“We have to close, there is no way out. We will let people go home and return when the situation improves. It is a sad situation.”
Zimbabwe’s foreign currency crisis intensified in the first half of 2016, the culmination of a yawning current account gap caused by a collapse in local production as well as weak commodity prices for the primary resource-dominated economy.
The country has racked up a cumulative US$20 billion trade deficit since dollarisation in 2009.
The manufacturing sector, whose contribution to exports has declined from 29 percent in 2013 to 15 percent last year, is among the most affected by the foreign currency shortage.
SOURCE: FINANCIAL GAZETTE