Wheels Drop Off In Zim’s Manufacturing Sector

By Thulani Munda

Harare, October 3, 2013 – Zimbabwe’s industries are reeling owing to low capacity utilisation, which dipped to 39.6 percent this year from 44.9 percent recorded last year, a startling reminder that the manufacturing sector remains in the intensive care unit, a new report has shown.

According to a report launched Wednesday by the Confederation of Zimbabwe Industries (CZI), the decrease was largely expected as the challenges facing industries such as unavailability of cheap funding and incessant power outages remain unresolved.

Capacity utilisation had shown an upward trend since the use of multi-currencies in 2009. It reached a peak of 57% in 2011 before tapering off last year.

The sector is weighed down by obsolete equipment and power outages that have increased the cost of production.

At the same time cheap imports have dashed recovery hopes for local industries.

Charles Msipa, the CZI president said the sector was in a critical condition.

“Industry is in intensive care, the prognosis is not good. Clearly it is a very dire situation,” Msipa said at the launch of the report in the capital.

Industry and Commerce Minister Mike Bimha said the industrial situation was bad adding that government was preparing an economic recovery programme to revive the economy. Government is working on a blueprint, Zimbabwe Programme for Economic and Social Transformation (ZIMPEST).

“I have engaged my counterpart in Finance to agree on the immediate modalities and measures to resuscitate an industry that is already in comatose,” Bimha said.

The manufacturing sector requires long term financing to replace obsolete equipment, which has pushed up the cost of production. Resultantly local products have become expensive compared to imports.

Analysts say government has to address electricity challenges and source for long term funding to revive local companies. To date interventions to provide cheap funding have become a drop in desert due to high demand.