Companies stop selling on credit in the wake of the loan ban

The echo of what happened last weekend is still reverberating within the Zimbabwean economy. Earlier we reported that Dairbord Holding had reversed its dividend withdrawal as it anticipated a liquidity crunch due to the president and the RBZ banning banks from making loans. That is just the tip of the iceberg a lot of entities in various sectors are now in a squeeze as they are facing a working capital crisis because again, the president’s order covers all loans and not just big loans but items as mundane as bank overdrafts. In the wake of this, and as part of their working capital management some entities have now decided to stop credit sales.

Two well-known entities Fivet and Wholesale beef have now suspended their credit facilities. This means that if you want to make a purchase from them you will have to pay before you can collect your goods. Some companies have also suspended employee loans as they expect to be dealing with working capital shortages. These things were all foreseeable and could have been easily tabled before the president and his inner circle went ahead with the bans instead of confronting the so-called currency manipulators.