Struggling to stay afloat

Al Jazeera visits Bulawayo where businesses are battling inflation and power cuts.


    Workers at a bakery in Bulawayo said electricty can be cut for up to eight hours a day

    Businesses in Zimbabwe are barely able to function due to the chaotic economy and frequent power cuts.

    Analysts have warned that the government's latest efforts to control the runaway inflation rate by slashing the prices of basic goods and services will not work.

    Al Jazeera's Haru Mutasa travelled to Bulawayo, Zimbabwe's second largest city to see how many companies are struggling to stay afloat.

    Some of the employees of the Main Bakery in Bulawayo have worked there for nearly 40 years, baking bread every morning, seven days a week.

    Al Jazeera exclusive

    Watch Haru Mutasa's report on Zimbabwe's economic instability

    They have seen the business rise and fall but they all say that these past few years have been the worst. The bakers are lucky to have jobs but they are worried about what the future holds for them and their families.

    Erratic electricity supplies have added to the crisis. Most countries in Africa go through power shortages but in Zimbabwe many companies cannot afford either generators or the fuel that goes in them.

    "It happens so often, on a daily basis ... We can sometimes go for up to eight hours without electricity, especially here in the industrial areas," Phillip Tapera, the manager of the bakery, told Al Jazeera.

    Profit impossible

    It is now almost impossible for them to make a profit.

    On a good day the bakery can bake up to 15,000 loaves of bread but only if they have electricity. On a bad day they only manage to bake half of that and that means they are losing money.

    Facts and figures

    Population: 12 million

    Unemployment: 80 per cent

    Life expectancy: 34 years for men and 37 years for women

    Inflation: 4,500 per cent and rising

    Exchange rate: One US dollar to 15,000 Zimbabwe dollars

    Economists do not think the situation will get much better for businesses and industries struggling to stay afloat.

    "It is exteremely difficult. I think that is why we have had a number of business closures and a notable decline in the manufacturing sector and various other sectors of the economy. It is extremely challenging," Farayi Dyirakumunda, an economic analyst, said.

    Companies that import raw materials, like the plastics recycling firm we visited in Bulawayo, have been hit the hardest. Importing means doing business in foreign currencies, and there is very little of that available in Zimbabwe.

    Even when US dollars are available banks never have the amounts that are needed and people are forced to turn to black market currency exchanges.

    Unfortunately the dollar never stays pegged at one figure in Zimbabwe. It changes value erratically and that makes running a business a risky juggling act.

    Lost money

    Daniel Chiweda, the manager of PMM plastics, told Al Jazeera: "The most difficult period is between Friday and Monday because you might lose money over the weekend."

    "What you invoiced on Friday by Monday would have lost a lot of money because of movement in the US dollar."

    Foreign currency is also needed to repair and buy manufacturing equipment. Some of the machines in the plastics factory have been here since the 1970s and can no longer turn out the volumes they could 30 years ago.

    The government is trying to alleviate things by offering bank loans. It is also making sure some raw materials are available at subsidised prices, but it clearly is not working.

    Economists have predicted that inflation will break through the 50,000 per cent mark by December, another all time high, while others have estimated that it could reach one million per cent.

    That means more companies will go bust and more people will lose their jobs.

    SOURCE: Al Jazeera


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