INDUSTRY in Bulawayo lost potential revenue of $20 million from stalled production as there was no commercial activity during the shutdown period that lasted for two weeks in January.
Letters of credit worth millions were also canceled as international buyers withdrew of the business climate during the shutdown protests.
A letter of credit is a document from a bank that guarantees payment as they provide security when buying or selling.
United Refineries Limited chief executive officer Busisa Moyo, said although the shutdown period occurred within an average 14 days, its effects to industry were far-reaching.
He pointed out that Bulawayo had 50 large industrial concerns, of which some suffered in the aftermath of the shutdown.
“Most of the companies were not affected directly by the riots but threats were received as to why they were open during the riots. That was the initial problem we had in staying open so we had to close at the start of the shutdown, which was a Monday (January 14),” Moyo said.
The industrialist noted that as the riots escalated and transport became a problem, industry workers could not access the factories and as a result production was lost.
“The average shutdown period was within seven to 14 days of lost production because we couldn’t get to work. For example, at the factory where we are (United Refineries Limited where cooking oil is processed), we need a minimum number of people to start up the plant otherwise it’s not safe industrially so we had to wait until things have returned to normalcy,” he said.
The industrialist also said companies suffered costs of demurrage, which are expenses payable to the owner of the truck on failure to offload goods within the agreed time.
“We had soya trucks coming in from Malawi but had to be parked for the whole shutdown period because they could not be offloaded until people returned to work until conveyors in factories were working again.
“Letters of credit that were canceled and suspended as a result of perceived increased risk. We were working on a letter of credit for grains that was suspended and specifically we were told ‘until the situation normalises”.
He said business continues to reengage in order to facilitate the reactivation of the lines of credit.
“There was a $30 million letter of credit for a particular industry sector to bring in raw materials to cover this dry period between February to April, before the harvest and that was suspended. We have the communication to that effect. We are still engaging although time has been lost and that could impact raw material availability,” Moyo pointed out.
Companies are still compiling information as to how much they lost during the shutdown period but Moyo said indications showed that about $20 million potential revenue was lost.
“This was as a result of the riots and the shutdown period ensuing where normal factory and commercial activity could not persist. Transport also remained an issue as in the availability of transport and costs, which we had to work through hence although riots were three days, the aftermath was much longer,” he explained.
The industrialist requested government assistance to regain those letters of credit and foreign currency.
“We request the government to assist with foreign currency and those letters of credit, industry need support in going back to normal as practically as possible. Members have also committed that they would maintain prices that were in existence prior to the Rands so there is no desire to take advantage of the situation that we are in,” he said.