Zimbabwe manufacturing capacity utilization expected to decline to 27 percent in 2020


Capacity utilization in Zimbabwe’s manufacturing sector is expected to drop to 27 percent in 2020, down from 36 percent last year against the background of several challenges facing the economy.

The country’s largest business representative body, the Confederation of Zimbabwe Industries (CZI) said Friday chief challenges was the prevailing acute shortage of foreign currency, state news agency New Ziana reported.

The drop in capacity utilization would be the second in a row, after falling by 12 percent last year.

“The manufacturing sector has been consistently operating below 50 percent in the past decade, save for the year 2011 when it was 57.2 percent,” CZI chief economist Tafadzwa Bandama said while presenting results of a recent manufacturing sector survey.

The survey covered the period from June last year when government re-introduced the Zimbabwe dollar as a mono currency, outlawing multi-currencies that had been in use for the past decade.

She said constraints faced by industry ranged from power shortages to failure to import raw materials due to foreign currency shortages.

The survey revealed that about 88 percent of companies were struggling to access foreign currency on the official market, with 53 percent of them saying they only got less than 10 percent of their requirements, often three months after applying.

Low demand for goods also complicated matters for local manufacturers as consumers struggled to make ends meet.

Industry players said policy consistency, which they said was lacking, could be one of the key ways to unlock industry productivity.

Failure by industry to boost production had multi-pronged effects on the economy, including job losses as industries scale down operations while government loses out on tax income.

Industry and Commerce Minister Sekai Nzenza said government will focus its energy on productivity and will do all it can to assist industry to regain its foothold.

“There is absolutely no doubt that we are going through a bumpy period,” she said, expressing optimism that the economy would get over the rough patch.

Nzenza said government would work with industry, the academia and consumers to ensure policy consistency and come up with guidelines that will make industry to prosper.

“I certainly believe that if we embrace local content, import substitution and working together, we can get out of this trap,” she said. Enditem

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