Online Reporter
Martin Kadzere
Zimbabwe’s manufacturing sector is undergoing a structural shift from basic operational survival towards expansion and regional competitiveness, driven by steady gains in production capacity and export growth, according to recent study findings.
The findings, delivered at the Zimbabwe Industrialisation Conference and Expo (ZICE 2026) at the Harare International Conference Centre (HICC) by Africa Economic Development Strategies (AEDS) executive director Professor Gift Mugano, show that domestic producers are increasingly leveraging retooling and plant modernisation to capture larger market shares across regional value chains.
The two-day conference, being held under the theme “Accelerating Industrial Growth through Regional Value Chains, Innovation and Trade”, was organised by the Ministry of Industry and Commerce in partnership with AEDS, an economic think tank and national export promotion and development body ZimTrade.
The study notes that the sector’s export trajectory has accelerated significantly over the past four years.
The baseline study, which surveyed 2 071 respondents across all 10 provinces, combined a primary field survey of 1 721 commercial entities and 350 key stakeholder interviews with data from the Zimbabwe National Statistics Agency’s national accounts and trade data to assess the sector’s health.
Manufactured exports surged from US$175.8 million in 2021 to US$228.7 million in 2023, before climbing sharply to US$437.6 million in 2024 and reaching US$584.8 million in 2025.
He noted that maintaining the upward trend will be essential to meeting the target of US$1 billion in exports by 2030.
Prof Mugano revealed that domestic industrial borrowing was now overwhelmingly funding long-term productive capacity rather than temporary operational overheads.
According to the report, 81.8 percent of financed firms directed their capital specifically towards industrial upgrading and export development.
Among surveyed manufacturers, purchasing new machinery and production equipment emerged as the single largest capital priority at 35.1 percent of firms.
An additional 12,4 percent of businesses prioritised warehouse and logistics infrastructure, while another 12,4 percent directed funds toward expanding into new export markets. The remaining capital allocations included new product development and value addition at 7,3 percent, retooling existing plant infrastructure at 7,2 percent, renewable energy investments at 6 percent, and digitalisation and artificial intelligence adoption at 4 percent, the report says.
“Zimbabwe’s manufacturers are borrowing to expand productive capacity, modernise operations and access new markets, not merely to finance day-to-day operations,” the report says.
“Industrial finance should therefore prioritise affordable long-term capital for machinery, technology, export expansion and value addition, enabling firms to accelerate industrial transformation and import substitution.”
However, the study notes that about 44 percent of total industrial capacity remains idle, identifying unutilised plant capacity as the single largest constraint on national competitiveness.
Survey respondents cited electricity reliability and power costs, foreign currency access and exchange volatility, high costs of long-term commercial finance, regulatory burdens and informal market competition as the principal operational bottlenecks holding back full production.
The findings also highlighted heavy structural concentration within the sector, revealing that five core subsectors — food processing, beverages, chemicals, construction materials and metals — currently generate roughly 95 percent of total manufacturing output.
Looking ahead to 2027, 63.1 percent of surveyed executives reported optimism regarding the prospects for the manufacturing sector, while 54.7 percent expressed confidence in the broader macroeconomic environment.
The report detailed that manufacturing’s overall contribution to national Gross Domestic Product (GDP) expanded from 16.8 percent in 2025 to 17.1 percent in the first quarter of 2026.
This steady trajectory keeps the manufacturing sector on course towards achieving the national target of US$1 billion in annual manufactured exports by 2030.
Within regional markets, exports to the Common Market for Eastern and Southern Africa (COMESA) reached US$22.8 million in the first quarter of 2026, up from US$7.4 million in prior tracking periods, with iron and steel products accounting for 30.2 percent of those regional shipments.
However, weak domestic industrial linkages continue to strain Zimbabwean manufacturers, who relied on foreign suppliers for 54.31 percent of their raw materials in 2025, up from 52 percent in 2023.
The report revealed a severe structural gap in local supply chains, with only 7 percent of surveyed firms reporting strong linkages with domestic suppliers or customer networks.
Vertical integration remains low across the sector and is heavily concentrated in a few subsectors, led by food processing at 34 percent and textiles at 14 percent.
Manufacturers cited the outright unavailability of local inputs as the main reason for importing at 59 percent, followed by cheaper foreign pricing at 24 percent and superior international quality at 14 percent.
To address these supply chain vulnerabilities, the study outlined a strategic action plan focused on building a dedicated domestic intermediate-goods sector.
Key policy recommendations included launching anchor-firm and supplier-development programmes, aligning Special Economic Zones (SEZs) and industrial clusters with import-substitutable value chains, and actively integrating small and medium enterprises (SMEs) as local supply chain partners rather than economic bystanders.
Addressing global market readiness, the report notes that while 58 percent of manufacturing firms have integrated basic operational sustainability practices — such as energy efficiency (17 percent) and waste management (19 percent) — Environmental, Social and Governance (ESG) compliance remains low.
Fewer than 8 percent of companies currently maintain formal emissions monitoring, structured ESG reporting, or carbon certification.
The report cautions that targeted policy support will be essential to help local manufacturers meet tightening international carbon and due-diligence standards to avoid future trade barriers.
The study has identified a portfolio of commercially viable, investment-ready projects across agro-processing, digital infrastructure, mineral beneficiation, transport manufacturing and fertiliser production.
Combined, the projects provide an immediate opportunity to mobilise private capital, strengthen value addition, accelerate import substitution, create employment and expand Zimbabwe’s industrial base.
Sustained investments in plant, machinery, and technology are continuing to drive the modernisation of Zimbabwe’s manufacturing sector, boosting both industrial productivity and overall competitiveness.
Survey findings show that a substantial portion of firms are actively committing capital to equipment and technology upgrades, reflecting widespread business confidence in long-term expansion rather than immediate survival.
While the adoption of Artificial Intelligence (AI) remains in its early stages, researchers highlighted significant scope for future productivity gains as digital transformation spreads across the sector, noting that early adopters of advanced tech are already outperforming their peers.
To drive the country’s industrial policy forward, the study outlines four critical priorities required for full economic transformation.
First, Government agencies must adopt absolute dollar value rather than national export share when reporting manufactured export growth across all official government tracking.
Second, policymakers must establish a robust import-substitution base by directing a targeted US$3,03 billion industrial programme into key subsectors, specifically fertilizers, fabricated steel, pharmaceuticals, plastics, and agro-processing.
Third, to push national manufacturing capacity utilisation above 60 percent, the report urges decisive action to stabilise power reliability, lower working-capital costs, and secure raw material availability.
Finally, the country must bridge its severe intermediate-goods gap by developing domestic supply industries to aggressively reduce the sector’s current 54 percent reliance on imported raw materials.
“Manufacturing is now the largest single sector of the Zimbabwean economy, and the economy grew 8,29 percent in 2025 on the rebased national accounts,” the report says.
“Exports remain concentrated in commodities, but the opportunity is clear: over US$3 billion of imports can be made at home and the same capacity can serve regional markets under AfCFTA, COMESA and SADC.”
