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Business Reporter
Government is adopting a cluster approach to value addition in the manufacturing industry in an effort to revive the areas that have been most affected by the demise of the sector over the past decade, an official has said.
Speaking at the launch of the Confederation of Zimbabwe Industries Manufacturing Sector Survey in Harare on Wednesday, Industry and Commerce Minister Mike Bimha said his ministry and stakeholders in the industry had come up with three sectors that would be prioritised for value addition.
“The sectors that have been prioritised include Leather and Allied Products, Clothing and Textiles and Pharmaceuticals Manufacturing,” he said.
“Now these sectors have not been chosen by default, but rather by design wholly informed by your thorough understanding of the operating challenges that you are faced with.”
Following a decade of economic challenges and the subsequent adoption of the multi-currency regime in 2009, the manufacturing sector has been faced with numerous challenges that have seen capacity utilisation fall from a high of 57,2 in 2011 to 39,6 percent this year.
The sector has been hard-hit by a number operational constraints which include the lack of affordable working capital, unavailability of power, antiquated machinery and low domestic demand, in addition to lack of long term funding.
In the manufacturing sector survey, CZI said the formulation and implementation of confidence-boosting policies that served the economy’s competitive advantages should receive top priority as this would help put the economy and the manufacturing sector on a sustainable growth path.
Minister Bimha last month said the implementation of the industrial development and national trade policies would be expedited to ensure the speedy recovery of the industry as the lack of full implementation of policies has been pointed out as a contributing factor to the failure to revive the ailing industry.
“An examination of the sectors chosen provides a twin revelation on the profound similarities with those contained in the Industrial Development Policy and the good rewards as well as abundant harvest reaped as a result of the comprehensive consultative process we undertook to come up with these policy options,” he said
All three sectors were among the six worst performing sectors in 2013 according to the survey.
In terms of capacity utilisation, the pharmaceuticals sector experienced the most significant from 58,3 percent last year to 20 percent in 2013 while the clothing and textiles sector marginally increased to 35 percent from 34,4 percent.
The leather and allied products sector remained the worst performing sub-sector from last year operating at 11,3 percent capacity utilisation.
An industry cluster is a group of related economic sectors that have linkages in their production process and that draw productive advantage from their mutual proximity and connections.
A cluster approach to de-industrialisation might help policymakers to identify the specific drivers of a specific cluster and build on the unique strengths of their regions. It also helps them to develop different strategies for different sectors.
Minister Bimha said the Zimbabwe Programme for Socio-Economic Transformation, a new economic blueprint that Government is working on, would also be the anchor of his ministry’s commitment to resolving industry challenges.
“The programme would be buttressed by the immediate holistic addressing and resolution of outstanding issues of the development and nurturing of our dying industry through financial and tariff support,” he said.
He said some of the measures Government would take to revive the industry could include tariff increases that might go against trading agreements in the region.
“Whilst we are aware that some of the measures we will take will raise discomfort in our regional trading partners in terms of our obligations to tariff reductions, those very same governments are also equally aware of Zimbabwe’s alienable right to ensure the sustained health of its citizens and industry as enshrined in the UN Millennium Development Goals,” he said.
Online Reporter