Did sanctions lead to the closure of Bulawayo companies?

Verdict: NO

While the Zanu-PF top leadership including the Bulawayo Provincial Affairs Minister, Judith Ncube, claim companies have been closing in Zimbabwe as a result of economic sanctions, there is no compelling evidence which directly links company closures to embargo.

The Africa report, an online publication, which in 2012 reported that 87 Bulawayo companies had closed shop since the formation of the inclusive government in 2009 did not implicate sanctions.

The publication instead quoted economist Eric Bloch blaming liquidity crunch and the influx of cheap Chinese imports.

“In the past decade, credit lines have been shrinking. This led to several firms relocating to Harare to access the funds,” Bloch was quoted as saying.

One of the country’s leading business newspapers, the Zimbabwe Independent in an article published in 2016 under the headline: “150 companies shut shop in 2016 second quarter,” did not cite sanctions as the cause of closures.

“This comes at time the economy is facing several challenges, including a debilitating liquidity crunch, low capacity utilisation and lack of cheap financing, among many others,” says the article.

In a detailed report the United States ambassador to Zimbabwe, Brian Nichols said blaming sanctions is a convenient scapegoat to distract the public from the real reasons behind Zimbabwe’s economic challenges – corruption, economic mismanagement, and failure to respect human rights and uphold the rule of law.

“There is no U.S. trade embargo on Zimbabwe,” Nichols said in his 2019 report. 

“American companies are interested in investing in Zimbabwe but are deterred by the massive levels of corruption, economic uncertainty, and weak rule of law.  So, investors turn to other promising opportunities in the region and wait for the country to embrace the political and economic reforms that would make it a more attractive destination.”

He added: “The greatest sanctions on Zimbabwe are the limitations the country imposes on itself.  Zimbabwe is ranked 160 out of 175 nations on Transparency International’s corruption list.  Zimbabwe loses more than US$1 billion per year to corruption.”

BBC in an article titled: “Zimbabwe sanctions: Who is being targeted?” published in October 2019 says there is little evidence to suggest that US and EU sanctions are responsible for Zimbabwe’s economic woes.

“The government of Zimbabwe has regularly blamed the dire economic performance on sanctions, and its neighbours in the southern African region are concerned about the impact Zimbabwe’s worsening economic crisis is having on the region,” said BBC.

“But there’s little evidence to suggest that US and EU sanctions are responsible for Zimbabwe’s troubles.”

While is indeed true that companies in Bulawayo and across the country have been closing in numbers since the turn of the century, evidence gathered does not link that to the US and EU sanctions imposed on Zimbabwe.

Source: Bulawayo Provincial Affairs Minister, Judith Ncube

Background: In an article carried by the state-controlled Chronicle, a daily newspaper based in Bulawayo on October 26 and headlined: “Sanctions led to closure of firms, says Minister,” Bulawayo Provincial Affairs Minister, Judith Ncube, claimed the closure of many companies in the city was a direct result of ‘illegal’ sanctions imposed on Zimbabwe.

Speaking on October 25, the day set aside by the regional bloc, Southern African Development Community (SADC) to campaign for the lifting of sanctions imposed by the West on Zimbabwe, Ncube blamed the sanctions for the collapse of firms in the city once known as the industrial hub of the country.

““If you remember very well Bulawayo was the country’s industrial hub. That is where we got the tag Kontuthu Ziyathunqa (the smoke that bellows), due to smoke as a result of productivity that was happening in the city.

But when sanctions were imposed in the early 2000s, a lot of industries in Bulawayo shut down. The companies lost trading partners with the international community and this has affected the quality of life for Bulawayo residents. People have lost jobs and service delivery has been affected,” said Ncube.

After the chaotic land reform, in early 2000s the European Union (EU) and the United States of America imposed sanctions on a number of Zanu-PF government officials and selected entities citing gross human rights violations and failure by the President Robert Mugabe administration to respect property rights during the exercise.

Since then the government has been blaming economic failure on those restrictive measures despite a number of the having been lifted.

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