MTP to rejuvenate industry

from an average 50 percent to 80 percent by 2015, provided current constraints are resolved.
Admittedly, affordable long-term funding and working capital presents the biggest hurdle to both Government and the private sector’s quest for higher productivity.
Industry and Commerce Minister Welshman Ncube contends the manufacturing industry requires an estimated US$2 billion to recapitalise operations.
But the MTP, which succeeds the Short-Term Emergency Recovery Programme launched in 2009 and the Three-Year Macro-Economic Policy Framework, will provide guidelines on how industry could raise productivity.
The new policy will run from 2011 to 2015 and forms the basis of Government’s economic planning and investment programmes over its running course.
It is expected that increased industrial output would restore the percentage of manufactured exports to 50 percent of total exports by 2015.
Says the MTP: “The manufacturing sector has potential to go back to its peak of 76 percent capacity utilisation levels and the targeted levels during the plan period.
“The anticipated growth in the capacity utilisation levels will feed into the growth of the manufacturing sector. As such, the sector is projected to grow on average by 5 percent (yearly) during the Medium Term Plan period.”
CZI president Mr Joseph Kanyekanye yesterday said manufacturing sector’s capacity utilisation averaged 40-45 percent last year and was now at about 50 percent.
“However, spurring growth in capacity utilisation from this level is going to take a lot especially in terms of capital injection and rehabilitation of infrastructure.
“If current capacity constraints are addressed, industry capacity utilisation will reach 70 percent by 2015.
“It must be noted that the performance of certain industries remains heavily constrained with certain sectors with capacity of below 25 percent,” he said.
The MTP contends successful turnaround of the economy requires a manufacturing sector that is vibrant, diversified and with strong functional links to agriculture, mining, construction and the services industry.
Against this background it was deemed critical that the manufacturing industry becomes a low-cost producer to compete regionally and globally.
In a bid to reverse de-industrialisation and promote new industries Government will establish an Institutional Development Bank to support the sector.
Government will restructure local development financial institutions to provide funding for industrial development and facilitate the extension of long-term lines of credit to local banks from international lenders of capital.
The Government said it would also deal with the issue of the country’s debt overhang, which stands at US$7 billion, to enhance inflows of lines of credit.
The MTP will also “promote enhanced value addition across all sectors. For example, in the cotton sector, the complete chain will require investment into establishment of de-liners and de-hullers to further process cotton by products into special paper, inks, emulsifiers and undercoats.”
Efforts will also put on research and development programmes, acquiring new technology, developing new industries, equipping research institutions to commercialise research outcomes and supporting local exports.
The MTP also intends to increase availability of utilities, promote trade and regional integration, adopt new institutional measures such as reviewing the structure of State enterprises and ensure crafting of new support policies.
Opportunities in the sector exist in textiles and clothing, agro-processing, wood and furniture, chemicals, pharmaceuticals, metals and metal working industries.
New opportunities are also abundant in fertiliser manufacturing, steelmaking, diamond cutting and polishing, granite cutting and polishing, platinum refinery, lithium beneficiation and electronics technology sub-sector.
l This is the third part in a series of articles on the recently launched Medium Term Plan to guide Government programmes in the period 2011-2015.