‘Manufacturing needs more funds’

against growth.
According to Industry and Commerce Minister Welshman Ncube, the manufacturing sector requires US$2 billion to recapitalise after a decade of instability.

Although significant resources have already been invested in retooling more is still required to spur economic growth and recovery.
This is despite the commendable 13 percent growth in capacity utilisation recorded over the 12 months to reach a new high of 57,2 percent.
Manufacturing is considered one of the four most critical sectors to Zimbabwe’s gross domestic product contributing an estimated 13 percent.

Government is worried that the percentage of exports on all manufactured goods remains low at 27 percent over the period under review.
Permanent Secretary for Economic Planning and Investment Promotion Dr Desire Sibanda hailed growth in the sector, but said exports remain low.
“This shows that there is still need to inject more investments into the manufacturing sector to deal with problems militating against growth,” said Dr Sibanda.

He cited low demand, lack of affordable working capital and terms of finance, machine breakdown and raw material shortage, among others.
He, however, noted that the growth registered thus far represented progress in the right direction for 80 percent industrial capacity by 2015.

“The Medium Term Plan highlighted that it intends to increase capacity utilisation to 80 percent by 2015. If this growth continues this is achievable,” he said.
Dr Sibanda said the thrust of the MTP, adopted as the anchor economic policy, to ensure the manufacturing sector accounts for 22 percent of GDP.
This would also entail making sure that the domestic economy is transformed from being a producer of raw materials to value added products.

In this regard, the Government seeks to increase the volume of manufactured products to ensure manufactured goods account for 50 percent of exports.
His comments come in the wake of positive growth in manufacturing output with volumes rising 41,1 percent in 68 percent of companies surveyed.

According to the Confederation of Zimbabwe Industries 2011 manufacturing survey power cuts, electricity charges, interest rates, lack of working capital, high wages and lack of external finance are the major constraints.

These issues would be dealt with extensively within the framework of the MTP to ensure that targets set therein and economic growth, are inevitable.

Government is also concerned by the limited diversity of the country’s export destinations with the bulk of the exports going only to Southern Africa.
Zambia remains the country’s biggest export destination accounting for 20 percent with East Africa and European countries receiving 2 percent apiece.

“Reasons for companies not exporting include unavailability of raw materials, uncompetitive products due to high cost and quality, poor technology, inadequate knowledge of markets and negative perception on Zimbabwe.

Challenges notwithstanding, the economy has grown by 5,7 percent in 2009, expanded by eight percent in 2010 and seen growing by 9,3 percent this year.
Various economic clusters espoused in the MTP, which targets economic growth of 7 percent per annum, will deal with issues of concern raised by CZI, the country’s manufacturing sector lobby group, in its survey.