Industry needs $10bn for revival

via Industry needs $10bn for revival – DailyNews Live 11 OCTOBER 2013 

Zimbabwe needs at least $10 billion to revive its distressed manufacturing sector, Industry minister Mike Bimha has said.

The sector, which had stabilised from a decade-long recession following the formation a coalition government in 2009, is now showing signs of strain with capacity utilisation hitting new lows.

According to the Confederation of Zimbabwe Industries (CZI)’s 2013 manufacturing survey released last week, industry’s capacity utilisation dipped in the year to September 2013 from 44,2 percent to 39,6 percent due to lack of affordable credit lines, ageing equipment coupled with acute power and water shortages.

Bimha told a CZI congress in Bulawayo that “capital constraints continue to hamper revival of the

industrial sector, as Zimbabwe remained ostracised from accessing lines of credit from the World Bank and International Monetary Fund.”

“The only meaningful assistance we have had has been accessed from China, but it is less than $1 billion, while the industry demand is $10 billion,” he said, adding that the removal of sanctions and engagement with the Bretton Woods institutions remained imperative for the industry’s resuscitation.

The newly-appointed minister noted that the influx of cheap Chinese goods was negatively affecting the industry and economy at large, and “government will do something immediately”.

“Whereever I go people talk about these cheap goods coming into this country, people also ask me questions why are we importing almost everything.

“This issue really requires urgent government attention,” said Bimha.

The southern African country’s industry — still suffering from the hangover of a decade-long economic crisis — has been bleeding due to cheap Chinese imports since 2009 when government liberalised the economy.

Addressing the same conference, CZI President Charles Msipa said government should look into the flight of industries from Bulawayo and crack down on graft, which he said was impeding economic revival.

“At times it feels like we are faced with economic reconstruction and a demand to overhaul. If we carry on with business as usual, there might be nothing left to survey in the manufacturing sector this time next year,” he said.

Until recently, Bulawayo was celebrated as Zimbabwe’s industrial hub, but years of precipitous economic meltdown and government neglect have turned the city into a ghost town.

Nearly 100 companies have closed down in Bulawayo since 2010, putting out of work an estimated 20 000 workers, with the remaining companies scaling down their operations or relocating to Harare.

At the national level, many companies are reeling from a combination of factors, including sustained power cuts, water rationing and capital constraints.

Clemence Machadu, a Harare-based economist added that “there is certainly an underlining crisis that could wipe out our industries, to leave us with industrial ruins.” He argued that Zimbabwe is experiencing this industrial crisis largely because of the country’s failure to fully implement policies.

“People are losing jobs. Between January and April this year, 863 workers were retrenched, according to the Retrenchment Board, compared 746 for the same period last year.

“Already, the industrial haemorrhage has seriously injured subsectors such as textiles and ginning, clothing and footwear, paper, printing and publishing, chemicals and petroleum products, as well as pharmaceuticals,” he said.