Delta's Closure Shows Economic Situation Is Tragic And Grave - Analyst

5 years agoMon, 24 Dec 2018 10:41:52 GMT

Delta's Closure Shows Economic Situation Is Tragic And Grave - Analyst

A renowned Zimbabwean legal expert based in the United Kingdom, Alex Mgaisa says that the closure of Delta’s soft drink production plant is an indication that the economy is in dire straits. The government’s lackadaisical approach in dealing with the issue is even more alarming. Wrote Magaisa

Delta is in the heavyweight division of Zimbabwe’s stock market (ZSE). When its temperature rises, so does the economy’s. News that the beverages giant has been forced by forex shortages to close its soft drinks plants should not be taken lightly, not just because its Christmas.
That the economy is in bad shape is not news. But the plight of a blue-chip company is serious business. To use old wisdom “kana zvichidai kumiti minyoro, Kuzoti yakaoma?” If a giant like Delta is shutting shop, what about the rest? What about the small ones? It’s ominous.

Delta’s plight sends a bad signal to investors on the ZSE. Without forex, foreign investors struggle to remit their dividends. It affects liquidity – key in markets. Zimbabwe has already been excluded from the basket of S & P Dow Jones Indices for Africa which is bad enough.
Closure of plants means temporary or even permanent redundancies, adding to the list of the unemployed & reduces prospects of new job opportunities. The private sector, which ironically, has thrown its weight behind this regime is haemorrhaging fast, as is the economy.
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The tragedy is there is no sense of urgency at all in government. They don’t seem to appreciate the gravity of the situation. The lackadaisical approach does not inspire confidence. The emperor is playing his violin while the country burns. Fiddling while Zimbabwe burns.