Source: Furniture sector requires $10 million for retooling – NewsDay Zimbabwe November 2, 2017
ZIMBABWE’S furniture manufacturing sector needs about $10 million for retooling to improve performance and production of quality goods, the Confederation of Zimbabwe Industries (CZI) has said.
BY MTHANDAZO NYONI
In its sectoral update, CZI said the furniture manufacturing sector, like any other sector in the country, was facing the common challenge of forex shortages, outdated machinery as well as unnecessary delays at borders.
“The sector requires about $3 million for raw materials and $5 million working capital support for the industry to properly function. However, the unavailability of foreign currency has impacted the expected performance of almost every sector in the country,” CZI said.
“There is also need to upgrade the outdated machinery to ensure improved performance and production of quality goods that can be competitive on the world market and be able to earn the much-needed forex. The retooling process needs about $10 million to be successfully carried out.”
CZI said the prevailing situation has been worsened by the continued smuggling and importation of substandard furniture.
The industry body said the Furniture Manufacturers’ Association was in support of the one-stop border post on the country’s entry points as an effective way to address unnecessary delays, especially with regards to raw materials importation.
CZI said the tea growers sector was also faced with several challenges such as outdated machinery, cash shortages and lack of funds to diversify.
“The prevailing cash shortages have impeded employees’ production time as they are opting to patiently queue for cash at banks than to report for duty, thereby slowing down productivity,” CZI said.
“The high premiums charged on electronic and mobile payments when purchasing inputs is reportedly leaving farmers purchasing inputs at very high prices.”
Due to lack of funds, the sector is unable to upgrade machinery to improve performance. On the same note, available local funding alternatives are too expensive and not comprehensive for the respective agricultural projects, CZI said.
“There is greater potential for the sector, if there is available funding to substitute imports and improve forex earnings through diversification and capitalising on the rising demand of avocados and various types of nuts on the world market,” it said.
CZI revealed that the manufacturing sector has recorded 5,5% growth in output volume in 2017 compared to 2016, while the weighted average capacity utilisation has decreased from 47,4% to 45,1%
CZI last week released its 2017 State of the Manufacturing Sector Survey which shows that there is an increase in demand for foreign currency attributable to increased production output as more firms import raw materials.
It also revealed that most of the raw materials have to be imported as they were not locally available. This indicated the need for revival of agro-based value chains to supply the raw materials so the country can produce locally.
The survey also highlighted the strategic importance of South Africa to the Zimbabwean economy.
“Most raw materials, capital goods and even some finished products are imported from South Africa, while the same country is the second largest export destination. This calls for the need to have well-formalised strategic ties with South Africa,” the survey shows.
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