Source: Industry capacity to drop 27 percent | The Herald February 17, 2020
Panashe Chikonyora and Yeukai Tazira
The manufacturing sector capacity utilisation is anticipated to drop to 27 percent this year, down from 36 percent recorded last year on the back of a plethora of bottlenecks confronting the industry, chief among them foreign currency shortages, according to the Confederation of Zimbabwe Industries (CZI).
The drop will be the second one in a row after it plummeted 12 percentage points last year from 48 percent in 2018.
CZI chief economist, Tafadzwa Bandama, revealed this during the presentation of the manufacturing sector survey in Harare that was attended by Industry and Commerce Minister Dr Sekai Nzenza as well as captains of industry.
The survey revealed that about 88 percent of companies struggled to acquire foreign currency on formal market during the period under review, with 53 percent of them getting less than 10 percent of their requirements.
It was noted that low demand for goods and services also complicated matters for many companies as consumers’ disposable income continued to decline.
Addressing delegates, Mrs Bandama said with such decline, the country’s aim to achieve economic stability was almost impossible unless urgent measures were put in place to arrest the situation.
“I still need to ask you as consumers, at 27 percent capacity utilisation in 2020, do you still expect to walk in a shop and buy what you want and if you are an industry captain, at 27 percent capacity utilisation, do you still expect to go to your factory, open and still operate in order to earn and enjoy profit?
“As for labour, do you hope that your employer will still employ you in 2020 if capacity utilisation will be at 27 percent?
“As a policy maker, Honourable Minister (Dr Nzenza), will you still prescribe the same policy measures that are currently prevailing in 2020, if capacity utilisation is at 27 percent and will tax collectors still be able to generate revenue?” she said.
Mrs Bandama implored Government to be aggressive in promoting local content, prioritising fair energy distribution in the productive sector and embark on sustainable agricultural development.
“So here I will just try to answer the questions I was asking you.
“There will be high level of unemployment at 27 percent capacity utilisation, with rising poverty levels in the economy – then there will also be shortage of goods and services, which result in increased inflation as well as reduced aggregate demand.
“This halts Government capacity to raise revenue and our ability to export will be curtailed if there is no production as well as accentuate the shortage of foreign currency. All these will result in a restive population which is not good for economic stability,” she said.
Mrs Bandama said there was need for a consistent policy making process in order to boost the
Speaking at the same event Dr Nzenza said Government was prepared to work with industrial players and assured them of Government support.
She said the sector’s capacity utilisation would increase if the economy imported less and be involved in the production of other products needed by other markets.
“Government is cognisant of the lack of foreign currency in the industry and lack of raw materials. I have spent the last six weeks going to different companies in my fact finding mission and what I have realised is that we are importing raw materials that we can easily manufacture in this country.
“We have become more dependable on imports, such as glucose a product we can manufacture from our own sugarcane,” she said.