adminConrad Mwanawashe Business Reporter
Manufacturing sector capacity utilisation slowed 2,2 percentage points to 34,3 percent this year from 36,5 percent last year as industry reels under several challenges, among them, the cost of doing business, capital constraints and pressure from cheap imports.
A State of the Manufacturing Sector Survey 2015 released by the Confederation of Zimbabwe Industries yesterday showed that some of the constraints the manufacturing sector has to navigate through also include low local demand and use of antiquated machinery.
Presenting the report CZI chief economist Ms Dephine Mazambani said capacity utilisation remains a key statistic in measuring the performance of Zimbabwe’s manufacturing sector.
“Last year, the weighted capacity utilisation was 36,5 percent and this year it is indicating a 2,2 percentage point decline. The factors having greatest negative impact on doing business in Zimbabwe include competition from imports, power cuts, policy instability, electricity charges and corruption,” said Ms Mazambani.
However, the Minister of Industry and Commerce Mike Bimha said the challenges are not insurmountable and not unique to Zimbabwe.
“Yes the challenges are there. Others have gone through worse situations than us but found ways out of the challenges.
‘‘We are aware that industry requires funding and is operating with backward technology but once we put our act together, it can be done. We have the potential,” said Minister Bimha.
Ms Mazambani said local manufacturers are facing challenges in historical export destinations for Zimbabwean products.
South Africa remains the largest competitor to Zimbabwean producers followed by China while Zambia is coming strong as a competitor to local manufacturers.
“In the previous survey, we noticed the advent of Zambia as a potential threat to local industry. Zambia continues exerting pressure on the local manufacturing with the response of countries having to compete with Zambia doubling from last year,” she said.
“Based on the results, there were no major changes in terms of leading export destinations. Zambia remains the top export destination for manufactured products receiving 31,9 percent of the manufacturing share of exports. South Africa’s market share stood at 17,6 percent while Malawi and Mozambique maintained their positions from last year in terms of the top four export destinations,” said Ms Mazambani.
Infrastructure is also another concern for local manufacturers. The report said that infrastructure remains in a deplorable state.
“Eighty four percent of the respondents indicated that the state of infrastructure is either poor or very poor. Sixteen percent of the respondents indicate that the state of infrastructure is moderate while no respondents pointed to good infrastructure.
Respondents indicated that the infrastructure is unable to sustain economic growth (90 percent) while 10 percent indicated that this has no effect on economic growth,” the report shows.
The top four challenges in infrastructure as stated by respondents are power cuts and shortages, poor road infrastructure, inefficient rail network within the country and water shortages.
On the outlook, the report shows that 40 percent of respondents indicated that the country will experience slight growth while 38 percent indicated that the country will be in a recession while eighteen percent expect moderate growth.
Ms Mazambani said manufacturers believe that the acceptance of the debt resolution strategy is a sign of confidence and will send signals to the international community that Zimbabwe is a safe investment destination.
She said Zimbabwe should implement agreed reforms to ensure a better performance.
Online Reporter