Import restrictions drove capacity utilisation to 47,4% from last year’s 34,3%, as the manufacturing sector increased output to plug the gap, a new report by the Confederation of Zimbabwe Industries (CZI) has shown.
Source: Capacity utilisation up on import restrictions – NewsDay Zimbabwe November 24, 2016
BY TATIRA ZWINOIRA
In July, the government promulgated Statutory Instrument (SI) 64 of 2016, which restricted imports on 43 products, which have local equivalents to boost local production.
CZI president, Busisa Moyo told NewsDay on the sidelines of the release of the Manufacturing Sector Survey 2016 that the results were in line with CZI’s desired goal of 65% capacity utilisation by the end of next year, but stressed more needed to be done.
“Yes, SI 64 of 2016 is one of significant contributors, but we were also having a lot of interest in local manufacturing as well, the buy local has been gaining momentum. SI 64 of 2016 came in to buttress that with a policy, but there was already a mind-set from CZI and Buy Zimbabwe that we should buy local,” Moyo said.
Due to ballooning imports, government responded by putting several protective measures to restrict the import bill.
Despite the increase in capacity utilisation, the survey showed only 20,7% of respondents viewed SI 64 of 2016 as positive on the back of the overriding concerns from industrialists on the macro-economic environment.
CZI found that 77,1% of respondents rated policy instability as negative or very negative for the economy, while 73% felt government was not engaging the private sector enough.
“Sixty-percent of the respondents do not know of any public-private dialogues or consultations conducted by Government … in the past 24 months to address economic challenges,” CZI chief economist, Dephine Mazambani said.
The manufacturing sector needs $2 billion to fully re-capacitate, with 45% of manufacturers reporting using machinery older than 20 years.
However, Mazambani said more than 50% of the respondents “indicated that it is not easy to access funding or loans from local banks, while another 44% indicated that financial sector is unresponsive to industry needs”.
Central bank governor, John Mangudya recently said the manufacturing sector reported the highest demand for imports, with low exports and as such needed to focus more on exporting.
The CZI report found that manufacturers listed corruption as the major factor impacting on business followed by policy instability, access to finance, competition from imports and low demand for domestic products.
Industry and Commerce minister Mike Bimha said the results were encouraging, but that more needed to be done to curb imported goods.
“We need research in order to know what needs improvement. We are still a very long way to go but this is not for government alone, we need a lot of people, who can contribute to where we want to be,” he said.
In terms of employment, CZI said 24% of manufacturers retrenched workers, while 76% did not. The manufacturing sector employs 250 000 employees.
Going forward, Moyo said industry would be working to get South African exporters to set up factories locally to try and get some of the proceeds from trading with South Africa.
South Africa accounts for close to 60% of total trading with Zimbabwe.
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