The 2012 Confederation of Zimbabwe Industries (CZI) Manufacturing Sector Survey released on Thursday shows that capacity utilisation in the sector has declined from 57, 2 percent to 44, 2 percent.
The survey further noted that the worst performing manufacturing sub-sector, leather and allied products, for 2012 is operating at capacity utilisation of as low as 27, 5 percent while the best performing sub-sector, battery, is operating at 76, and 5 percent.
The battery sector is driven by the importation of second-hand Japanese cars, which have flooded the Zimbabwean market. The survey highlights the sluggish sector performance, with the average manufacturing sector output growing less than two percent.
Manufacturing export sales have remained unchanged at 15 percent of total turnover.
Zambia remains the top export destination for manufactured products receiving 30 percent of the manufacturing share of exports.
Mozambique comes second to Zambia while South Africa has dropped to fourth position.
The lack of competitiveness of Zimbabwean local products on the export market is attributed for the lack of growth in exports. South African tops the list of competing imported products with 85 percent of respondents indicating that their products compete with South African imports while 66 percent said their products compete with imports from China.
Facts blamed for the greatest negative impact on capacity utilisation and doing business in Zimbabwe in 2012 included lack and high cost of funding, power shortages and power costs, economic policy instability, high labour costs and rigid labour laws.
“The general observation from the Survey is that policy inconsistencies and ambiguity have resulted in capital flight and reluctance by foreign investors to commit significant investments across all sectors of the economy,” reads part of the executive summary of the survey.
Kumbirayi Katsande, the president of the CZI, said his organisations survey was a clarion call to the need for action from all stakeholders, particularly government.
“We have been saying this but the facts are here for us to see. Manufacturing is in a state of crisis. And the crisis is deepening,” said Katsande.
He said he was puzzled why Zimbabwe’s policy-makers seemed reluctant or unconcerned about what he referred to as the de-industrialisation of Zimbabwe.
“Once companies collapse and local products are substituted by imports, it will be very difficult to resuscitate them. So speed in coming up with corrective action is key,” he said.
The CZI boss added that contrary to what happened in the last three years, the manufacturing sector was now at best in a state of stagnation with many companies in decline or closed.