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Industry wobbles in Zim's second city

Bulawayo - Ravens squawk from the rooftop of a deserted building, once a top producer of animal feed that employed hundreds in Zimbabwe's second city of Bulawayo.

Empty factories are now a common sight in Bulawayo's industrial district as the economy struggles to recover from a decade-long crisis, with firms downsizing, closing or relocating to the capital for better opportunities.

"Companies are closing here, Bulawayo needs money," said Ruth Labode, who runs a textile mill.

"A banker openly told us that if they receive a loan application to fund a restaurant business from Bulawayo, they would not fund it.

"In Bulawayo, there are no prospects of having the project breaking even fast enough, when compared to other towns such as Mutare or Harare," she said.

Planning ministry figures show that 87 companies closed in Bulawayo last year, including clothing, auto and construction firms. An unspecified number of others relocated to neighbouring Botswana.

"Bulawayo today is a national crisis, a national crisis that manifests itself in the closure of companies resulting in poverty, high unemployment and low economic activity," Prime Minister Morgan Tsvangirai told a recent rally in the southern city.

Besides the lack of cash, Bulawayo suffers from perennial water shortages common to arid southern Zimbabwe.

"The problem with Bulawayo, besides the issues of water, is that there is no money circulating here," Labode said.

Zimbabwe Stock Exchange-listed Apex Corporation said it plans to dispose of its loss-making All Metal Foundry in Bulawayo, putting 200 jobs at risk, its chairman said.

"We have decided to sell because its long-term viability is questionable," company chairman Farai Rwodzi told AFP.

"Although the gold mining sector, which uses the foundry is recovering, the technology at the company is old and unviable. That is why we are selling."

Zimbabwe's economy has begun recovering since the government abandoned the worthless local currency two years ago, allowing trade in US dollars and other major foreign currencies.

But most companies still operate at less than half their capacity due to funding woes, according to the Confederation of Zimbabwe Industries.

Bulawayo mayor Thaba Moyo said he hopes to attract investors back to Bulawayo, partly by trying to win over Zimbabweans who have moved abroad.

"Our aim is to reclaim our spot as an industrial hub of Zimbabwe," he said. "We have to find new investors, as our economy was being run by big (business) people but they have left."

Bulawayo needs to "go out, especially to South Africa, to go and meet our Zimbabweans in the diaspora to try and address them on the problems we are facing as a city," he said.

"All we have to do is to get them back so that they take responsibilities and take over those companies that have either closed down or relocated."

Hundreds of thousands of people, especially from southern Zimbabwe, have migrated to South Africa and Botswana in search of greener pastures.

Uncertainty over new elections tipped for this year has scared off new investors who also worry about President Robert Mugabe's threats to take over foreign firms.

But the main issue is finance, with banks only offering 90-day loans at rates of up to 45%, said economist Eric Bloch.

"Most businesses are under-capitalised. Those that have relocated, it's because they have bigger operations in Harare," he said. "For example they have larger factories there so they are consolidating their operations.

"The single biggest problem is lack of capital. Companies need long-term financing instead of the 90-day loans they are being offered," he said.
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