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Golden Sibanda
Industry has proposed wide ranging policy interventions to save firms and enable them produce during Covid 19 induced lockdown that include financial bailouts, tax incentives, border efficiency and market determined exchange rate.
Companies also demanded easy access to market, removal of business restrictions, deferment of rentals, suspension of licence fees, protection from dumping, working capital and export incentives.
A survey by the country’s largest industrial body, Confederation of Zimbabwe Industry, discovered that industrial capacity utilisation had significantly declined during the national lockdown, as the country battles to contain raging increase in deaths and infections.
Before the lockdown, 54 percent of the manufacturing firms were operating above 50 percent of their capacity while the balance were operating below rated potential.
Post the imposition of the national lockdown, only 17 percent operated above half their capacity although a handful of entities that were running below 50 percent managed to scale up production.
The outbreak of the coronavirus globally has resulted in national lockdowns that have disrupted trade, value and supply chains across the world, which have negatively affected economies heavily dependent on imports such as Zimbabwe.
CZI said it had gathered information in research study that was key in the implementation of the local content as well as the industrialisation and export policies as “we swim in the uncharted waters of covid19”.
It said the economy needed to achieve some measure of self-reliance in view of covid19 and its restrictions to trade and movement.
Moreover, raw materials that can be produced locally should be produced in the country to improve competitiveness of local products on the global markets.
This calls for the aggressive resuscitation of local value chains and heightened value addition and beneficiation initiatives.
It is believed the initiatives will ensure that jobs are not exported and value added products will fetch more value on the export market.
Export traders also highlighted that inability to access raw materials from source countries affected their ability to sustain export demand.
The survey by industry into the impact of Covid-19 found that this led to significant loss of export revenue and potential threat to their market share in the export destinations.
CZI proposed broad recommendations, based on a survey jointly conducted with national trade promoter Zimtrade, for interventions to assist firms and cushion the economy.
The survey by CZI and Zimtrade revealed that the fall in industrial capacity was caused by supply chain disruptions, delays in travel logistics and challenges in receiving orders from customers and clients.
“Exporting companies have indicated that before the national lockdown they were operating at 60 percent and during the lockdown they are operating at 31 percent.
“Some exporting companies indicated that reduction in capacity utilisation was due to the reduction in demand for their products in traditional markets,” the report noted.
Bongani Ndlovu