adminTHE country’s appetite to import dropped by US$1,4 billion last year as falling consumer spending put a dent on aggregate demand.
Industrialists continue to warn that production in local industry remains worryingly low.
Statistics from the Zimbabwe National Statistical Agency show that the country’s import bill declined from US$8 billion in 2013 to US$6,4 billion in 2014.
Confederation of Zimbabwe Industries president Mr Charles Msipa told The Sunday Mail Business last week that local industry had a new lease of life after Government moved in to stem the unrestricted influx of imports.
The 2014 CZI Manufacturing Sector Survey indicates that fierce competition from emerging economies, particularly Brazil, Russia, India, China and South Africa (BRICS), threatens to throw domestic producers out of business.
Direct foreign competition rose to over 90 percent in 2014 from 58 percent in 2013, with the largest supply of imports coming from the BRICS.
Last year, Government raised concern that the soaring import bill and the widening trade deficit were adversely affecting economic growth prospects.
Stubborn liquidity shortages, power outages, low consumer demand and increased foreign competition are hurting business viability.
It has also been argued that authorities should plug the country’s porous borders to curtail smuggling, which presents unfair competition.
CZI opines that local companies have capacity to meet demand.
It is argued that the cooking oil sub-sector has been able to meet local demand and fill the import gap.
“What we need to focus on going forward is to improve on competitiveness, improve agriculture productivity because the sector supports the manufacturing sector with raw materials and many other downstream industries.
“I think the slowdown in imports may arise from the fact that aggregate demand has declined over the last 12 months. Certainly where control has been placed on commodities, the local manufacturers have been able to fill in the gap,” explained Mr Msipa.
He noted that interventions spelt out in the 2015 National Budget must be implemented for local industry to regain competitiveness.
Capacity utilisation in local industry dropped to a record 10 percent after the United States and European Union imposed sanctions on Harare over its land reforms.
The operating environment improved after Government adopted the multi-currency system in 2009, but capacity utilisation has remained low, falling to 36,3 percent in 2014 from 39,6 percent the prior year.
There is optimism that the manufacturing industry will be revived and investor confidence restored.
Buy Zimbabwe business development executive Mr Alois Burutsa said although the economy is struggling, some companies have turned the corner and are operating well, resulting in the reduction of the import bill.
Apart from cooking oil companies, the dairy industry has also been ably competitive.
Said Mr Burutsa: “Cooking oil has been a big contributor to the import bill, but now our local producers are able to meet national demand, reducing imports.
“The confectionery sector has also improved on production. But the issue of demand cannot be overlooked as some companies shut down, thus, affecting aggregate demand,” said Mr Burutsa.
He, however, raised concern with the obtaining deflationary environment.
“It means businesses may adjust prices downwards in an environment where productivity is low (and) that could spell a disaster because production costs will be high,” said Mr Burutsa.
Online Reporter