admin
MARKET watchers say CZI’s manufacturing sector survey risks losing relevance if it continues to solicit views from big corporates only rather than small and medium enterprises where economic activity seems to be concentrated.
The informal sector is now regarded as a major contributor to GDP growth, accounting for 85 percent of employment, according to Zimbabwe National Statistics Agency (Zimstat).
Economists believe that the CZI survey needs to reflect changes that have occurred in the manufacturing sector, capturing input from informal industries in order to deliver a more comprehensive and representative outcome.
“I think it will be ideal if the survey could distinguish between capacity utilisation in the large corporates and smaller companies because there could be a bias that could be introduced by the large companies,” said economist Mr Martin Zhou.
Analysts opine that the survey needs to extend to other crucial sectors of the economy such as agriculture which provides 70 percent of raw materials required in the manufacturing sector.
Nestle Zimbabwe managing director Mr Kumbirai Katsande said there is need for a true representation of the state of the economy if a solution to the current economic challenges is to be found.
“Some of the problems in manufacturing are arising from agriculture. For instance, if we are producing less than 500kg of maize per hectare or 400kg of cotton per hectare, there is very little you can do in the factory to improve on productivity and the farmers still expect world-class prices.
“. . . . To me, the survey is saying we are still in a crisis and our response cannot be more surveys and more surveys, it seems we are doing very well in surveys,” said Mr Katsande.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya noted that some of the results in the survey showed an anomaly in the consumption and purchasing trends. While the 2015 survey shows that industry is battling high competition from imports, local industry has most recently been complaining about low consumer demand.
“How do you synchronise low demand and high imports?” quizzed Dr Mangudya, adding this was synonymous to being poor and rich at the same time.
“Maybe you are in the wrong industry and producing what is not needed. What are you importing if there is no demand. . . . You may think you are measuring capacity utilisation yet you are measuring expectations.”
According to CZI’s 2015 survey, capacity utilisation slowed by 2,2 percentage points to 34,3 percent on a myriad of challenges among them outdated machinery, liquidity challenges and low consumer demand.
“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 while presenting results of the 2015 survey.
Of the surveyed industrialists, 38 percent believe the country will be in a recession in 2016 while 40 percent believe there will be “slight growth” in 2016. CZI however noted that the acceptance of the country’s debt resolution strategy by international finance institutions is a sign of confidence and will send signals to the international community that Zimbabwe is a safe investment destination.
Online Reporter