Manufacturing capacity drops

Conrad Mwanawashe 9 October 2014
Capacity in the manufacturing sector fell by a marginal 3,3 percent to 36,3 percent cushioned by a significant jump in capacity in the edible oils sub-sector from 30 percent to 65 percent.
The drop could have been worse had it not been for gains in some sub-sectors which made up for declines in other sectors.

The 2014 Confederation of Zimbabwe Industries Manufacturing Survey released yesterday shows that industries in Zimbabwe are under serious threat as de-industrialisation has reached catastrophic levels, with dire consequences to the state of the economy.

“The slow down being experienced in the economy at large has not spared the manufacturing sector. In 2014, average capacity utilisation continued to decline, shedding 3,3 percentage points to 36,3 percent.

“Quite telling is the prolonged effects of power cuts and costs, liquidity challenges, low domestic demand and many others on the performance of the manufacturing industry,” CZI senior economist Ms Daphne Mazambani said while releasing the 2014 survey.

The survey provides insight into the economy from the business perspective. During the survey, more than 250 questionnaires were sent to respondents in the manufacturing sector from companies drawn from the four CZI Chambers namely Mashonaland, Manicaland, Matabeleland and Midlands.

These include both CZI members and non members with directors and chief executives in participating firms completing the questionnaires.

From the survey, 81 percent of the respondents indicated that the country is likely to continue in a disinflation mode due to lack of
capital inflow, the liquidity crunch, no change in economic policy and low domestic demand.

Officially launching the survey, the Minister of Industry and Commerce Mr Michael Bimha said Government is aware of the constraint that industry is facing and commends those who have shown resilience.

“We don’t want to shy away from those challenges. We don’t want to gloss over them. We have to face them right in the face and say yes we have challenges,” said Minister Bimha.

“I have been very pleased going around and witnessing some success stories. Just last week I went to officiate at the clothing indaba.

“I was taken around the industrial area of Bulawayo and to a company that used to be a household name but had gone under. It’s now coming out of judicial management.”

He said there has been progress in the beverages sub-sector who borrowed heavily, imported new equipment and new technology.

“We have been witnessing some success stories in the edible oils and confectionery sub sectors. Government asked my ministry to come up with a report of the state of industry and we worked with the private sector,” said Minister Bimha.

The report analysed all sectors in terms of capacity utilisation and the specific challenges that each sub sector is facing.

“Some of the challenges are generic, issues to do with retooling and funding but others are specific. The majority of the recommendations that were put forward were taken on board by Cabinet.

“We will come back to you on the few recommendations that were not taken on board. Some of the recommendations have already been taken on board by the Minister of Finance (and Economic Development) in the Mid Term Economic Review statement,” said Minister Bimha.

Some of the industrialists at the launch of the survey highlighted that the manufacturing survey should be broken down into sub sectors to ensure that the overall findings do not distort the correct position.

Of the respondents to the questionnaire, 37 percent said they were operating at levels above 49 percent, while the remainder said they were operating at levels below 49 percent.

The factors limiting capacity in the sector remained unchanged. Similar factors have been recorded over the past three years.

In an effort to provide useful, timely and up to date information to stakeholders and policymakers, CZI has introduced a new measure on the state of the manufacturing sector, the Purchasing Managers Index.

This statistic will be produced monthly by CZI. Discussions are at advanced stages to collaborate with the Zimbabwe National Statistics Agency. Herald