‘Zim littered with zombie firms’
ZIMBABWE is littered with “dogs and zombie companies” that are stagnant and have moribund prospects, limited cash-flows and low market share, according to the strategic advisory firm Mark & Associates Consulting Group.
In its latest report titled Zimbabwe 2024 Outlook & Strategy: Barbarians at the Gate, it said most firms in the country were struggling.“In a new world order that is characterised by production processes which are driven by AI (artificial intelligence) and robots, it is difficult to envision the future of struggling businesses reeling under sub-optimal capacity utilisation levels,” the report read in part.
“Zimbabwe remains littered with dogs and zombie companies that are stagnant and have moribund prospects, limited cash-flows and low market share.“A major concern is that such companies are ‘uncompetitive survivors’ and a barrier to productive growth given that the survival of weak companies contributes to lowering the average overall productivity.”
The research firm said such companies were detrimental to the economy as they locked up capital and talent that should be available to more successful and dynamic companies in other sectors of the economy.
Large firms in the manufacturing and mining sectors recorded slight increases in capacity utilisation in the third quarter of 2023, according to the Zimbabwe National Statistics Agency.
Manufacturing sector recorded 56,8% capacity utilisation, while that of the mining sector stood at 52,6%. Small and medium companies recorded 44,4%.“In 2024, companies will experience chaotic growth cycles if they do not rethink their corporate structures. Keeping brand clowns who masquerade as C-suite executives will result in historic failures,” Mark & Associates said.
The advisory firm also said this year companies would experience desertion by top professionals who will leave with brand currency, operational wisdom and premium clients.These professionals will either leave Zimbabwe or set up their own establishments, it noted.
“In a country experiencing significant economic headwinds coupled with high taxes, a new problem of a massive brain-drain has also emerged. Migration has essentially been a household strategy to address current and future risk,” Mark & Associates said.
Zimbabwe is losing skilled professionals such as lecturers, engineers, medical practitioners and accountants to mainly the United States, United Kingdom, Australia and South Africa, among many other countries.
According to the 2022 census report, 908 914 people emigrated from Zimbabwe at the time of the census. Most of the people, 84% emigrated for employment reasons, while 9% and 5% emigrated for family reasons and study or education, respectively.
The research firm noted significant productivity headwinds associated with capital constraints, policy shifts and electricity shortages.Zimbabwe has been experiencing severe electricity load shedding attributable to technical challenges at thermal power generation plants coupled with falling dam levels and import constraints.-newsday
