daniel chigunwe
Tapiwanashe Mangwiro
The Ministry of Industry and Commerce is adamant that industry targets will be met in 2023 despite a plethora of problems being cited by industry players.
Reason being that more companies are lined up for commissioning this year as Zimbabwe targets 70 percent manufacturing industry capacity utilisation.
As a result, the past four years have seen the Government focusing on growth and revival of the industry through several policy interventions.
Companies are struggling to stay afloat, due to headwinds including crippling rolling power cuts lasting more than 12 hours daily, rising cost of production, rocketing exchange rate, and liquidity crunch and currency volatility, among other problems.
The country’s power utility, ZESA, since April is now generating an average of about 1100MW against a national demand at peak period of about 2 200MW due to frequent breakdown at its ageing thermal power stations.
Zesa chairman, Dr Sydney Gata, is on record that the thermal power stations are still functioning due to the engineers’ ingenuity.
To cover for the shortfall, Zimbabwe is importing from regional power utilities especially Eskom of South Africa and Hydro Cahora Bassa of Mozambique.
Industry is, however, calling for a sustainable solution to the current power situation which has become perennial.
“We have been affected big-time by the power outages and the prevailing situation is not sustainable for the industry as we speak. This situation is going to affect our projections on capacity utilisation,” Confederation of Zimbabwe Industries president Kurai Matsheza told Business Weekly.
“We are hearing that there are efforts being undertaken to address the power issue but there is a need for a sustainable solution to this because the problem has become perennial.”
He added; “All our businesses have been affected big-time and it is also paramount to note that it is not the role of industry to engage ZESA because industry should be focusing on running businesses while ZESA focuses on its mandate of producing electricity.
“We cannot talk about these things over and over again without solutions. Industry is in trouble due to these power outages.”
The Zimbabwe National Chamber of Commerce chief executive, Christopher Mugaga, also told Business Weekly that the power crisis is exacerbating the industry’s competitiveness as the businesses are pushing prices to sustain operations.
“Power crisis is making us lose a competitive edge to imports as our products will become more expensive than before,” Mugaga said. “If there will be shortages, certainly there will be increased smuggling of cheap imports into the country thereby weakening the industry.”
He said the problems being created may not be solved even after the power crisis is addressed.
“This will be a breeding place for substitute imports and it will be difficult to deal with even when the power shortages are attended to,” Mugaga said.
Others believe that a combination of the auction system, removal of duty on selected machinery and equipment, injection of cheap funds and allocation of Special Drawing Rights for the industry has ignited hopes for the resuscitation of strategic industries.
With the industry maintaining a growth path, the injection of capital into several entities is boosting growth.
According to a Ministry of Industry and Commerce report submitted to Cabinet this week, there is notable progress in terms of the revival and commissioning of firms.
This includes the resuscitation of David Whitehead Textiles in Chegutu, which is being installed with new spinning and weaving machinery. When complete, the project is expected to create over 1 000 jobs and reduce textiles and clothing imports.
Olivine Industries is also back on the growth trajectory with the firm expected to commission a multi-million-dollar margarine plant.
A US$5 million margarine plant at Willowton in Mutare has also been cited by the Ministry of Industry and Commerce as a success story amid revelations that it has reached 85 percent level and is expected to produce over 150 tonnes of margarine.
In a move expected to further boost the production of bread in the country, Bakers Inn has already invested US$30 million on a new bakery plant in Bulawayo and the plant which is now the largest in the country will produce over 200 000 loaves of bread daily.
A US$11 million Buffalo Brewing Company plant at Stapleford is also functional ahead of its commissioning this year.
The latest manufacturing sector survey report indicated commitment and willingness by the industry to increase output and create jobs, but sentiment in the industry is that capacity utilisation will fall due to many problems faced currently.
Interventions in the sector by both private and public have resulted in capacity utilisation for the sector being on a positive trajectory at 56,1 percent in 2022, 56,52 percent in 2021, 47 percent in 2020, 36,4 percent in 2019, and 41,8 percent in 2018.
Bongani Ndlovu