Zimbabwe expects industrial capacity utilization to jump to 61 percent in 2021


Zimbabwe’s manufacturing sector expects above 61 percent capacity utilization in 2021 after registering 10.6 percentage point growth to 47 percent in 2020, the Confederation of Zimbabwe Industries (CZI) has said.

Capacity utilization has remained low for several years now because of various constraints, chief among them a shortage of foreign currency.

The Herald newspaper reported Friday that the CZI had, during the launch of the 2020 manufacturing survey result on Thursday, given a projected figure showing an upward trend in production despite contractions caused by COVID-19.

“I would like to highlight that we are emerging but we are not yet there. We are still below 50 percent of capacity utilization, although capacity utilization improved from 36.4 percent in 2019 to 47 percent in 2020,” CZI chief economist Tafadzwa Bandama said.

The CZI conducted the survey in industrial sectors that include foodstuff, beverages, transport and equipment, non-metallic minerals, clothing and footwear, tobacco and chemicals.

“Industry is hoping and projecting to increase capacity utilization to 61 percent in 2021, Bandama said. “To achieve this 61 percent, they (companies) are asking for a consistent policy environment, exchange rate stability, price stability in the goods market as well as the services market.”

“They are also asking the government to incentivize the local content policy,” she said.

Going forward, Bandama said, it is imperative to foster competitiveness in the economy to stimulate exports by improving the business environment.

“Competition from imports as well as transport, which was grounded in 2020 due to the national lockdowns, were some of the challenges that companies faced as we tried to combat the COVID-19 pandemic,” she said.

Bandama said companies have complained that the shortage of foreign currency remains a challenge.

The fixed exchange rate in the first half of 2020 worsened the plight of companies until the Reserve Bank of Zimbabwe introduced the weekly Foreign Currency Auction Trading System in June, which has been credited for instilling price stability.

Bandama said the discovery of a market-based exchange rate implied that pricing distortions in the market, especially the indexation of prices to the parallel market exchange rate, had been reduced.

“The introduction of the market-based exchange rate at the auction system assisted in dampening inflation pressures in the economy.

“It also assisted in the acquisition of raw materials and equipment hence assisting in the improvement of capacity utilization by companies,” she added. Enditem

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