Back to Index

"Zim requires $22bn stimulus package"
NewsDay
December 09, 2013

https://www.newsday.co.zw/2013/12/09/zim-requires-22bn-stimulus-package/

Zimbabwean requires a $22 billion stimulus package from international capital markets to ignite economic growth on the back of massive company closures and intense competition from regional peers, a local expert has said

Judicial manager Cecil Madondo said firms, which have been seeking capital since the introduction of multiple currencies in 2009, immediately require fresh capital which can be sourced from international capital markets.

Judicial management is a court supervised procedure designed to give the debtor a temporary respite from the claims of creditors, during which time a court-appointed manager investigates the debtor’s affairs, clarifies its debt, and attempts to restructure the company and the claims against it so that it can revert to being profitable.

Presenting a paper titled Enhancing Zimbabwe’s regime for resolving corporate financial distress: Current challenges and possible solutions, Madondo said out of the stimulus package, $10 billion would retire the country’s external debt, while the balance would be given to financial institutions.

“The balance of $12 billion should be seated with local banks and the Reserve Bank of Zimbabwe should be capacitated and viable projects should be initiated by government,” he said.

Madondo said government should take a look at the outdated legislation and statutes and create employment for the citizens.

“Some countries have surplus cash. As a country, we should be in a position to approach them to pay the old debt so that we will get access to cash and produce our own goods not to be a warehouse as is the case now,” he said.

Madondo said presidential powers should be used to suspend or revise statutes such as labour and the indigenisation law. Experts say the country’s labour laws are skeweed in favour of employees, sometimes leaving companies in dire strait when workers are compensated. The empowerment law which compels foreign-owned companies to sell 51% stakes to locals has been criticised for scaring foreign direct investment inflows.

Meanwhile, Madondo said due to liquidity constraints on the market, judicial managers continued to face funding challenges.

Madondo said before the multi-currency system, it was easy to access funding from suppliers and financial institution, but under this environment it has become difficult.

He added that there is a board that represents judicial managers, but it has no financing to fund the secretariat or run an office.

Madondo said he had recorded a 20% failure rate in managing companies under transition due to the reluctance by some shareholders to give autonomy to the judicial manager.

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP