Capacity in manufacturing sector drops to 34,3 percent

CAPACITY utilisation in the manufacturing sector, which measures industry’s productive potential, dropped 2,2 percentage points from 36,5 percent last year to 34,3 percent this year as local industry continues to face significant headwinds, latest figures from the Confederation of Zimbabwe Industries (CZI) show.

The industry representative body noted that the challenges facing local companies remain the same.

“Pessimism in the economy weighed down industry capacity utilisation. The main constraints remain the same, that is low local demand, competition from imports, liquidity challenges, outdated machinery and high cost of doing business,” said CZI chief economist, Ms Daphne Mazambani on Wednesday while presenting results of the 2015 survey.
Of the surveyed industrialists, 46 percent said business has not been viable compared to 54 percent last year.
While 38 percent of the respondents believe the country will be in a recession in 2016 as deflation pressures continue mounting on the already constrained industry, 40 percent say there will be “slight growth” in 2016.
Most of industry – 84 percent of the respondents – believe that the state of local infrastructure is either poor or very poor.”

Added Ms Mazambani: “Ninety percent respondents indicate that infrastructure is unable to sustain economic growth while 10 percent said this has no effect on economic growth.”

Zambia and South Africa remained the biggest export destinations for the manufacturing sector, accounting for 31,9 percent and 17 percent respectively.