Economy on knife-edge: Minister

via Economy on knife-edge: Minister – The Zimbabwe Independent October 10, 2014

INDUSTRY minister Mike Bimha this week rang the alarm bells, warning the economy is submerged in a sea of gloom and doom while raising the need for urgent action to rescue the situation.

Bimha said there was need for urgent measures to arrest the crisis and salvage the economy from the edge.

He was speaking at an event to mark the commissioning of a bottling line at African Distillers Ltd (Afdis) head office in Mt Hampten on Wednesday after he had told captains of industry at the Confederation of Zimbabwe Industries (CZI) manufacturing sector survey report release that he was seized with improving the ease of doing business in the country and ensuring investment was free of red tape.

“We are submerged in a sea of gloom and doom,” Bimha said in remarks which reflect the depressing mood enveloping the nation since last year’s general elections.

Bimha said cabinet had taken on board most of the recommendations on how to improve the ease of doing business. He also revealed that President Robert Mugabe wants to meet captains of industry to discuss economic problems before the end of the year.

Bimha said he had suggested the meeting to Mugabe after Tuesday’s cabinet session. He said Mugabe responded by saying: “It should have been done yesterday.”

“I am glad to advise that we are also looking at the issue of labour legislation reform with great speed,” Bimha said.

“And I would like to assure you that as we go into this coming year, we should be seeing more achieved in that regard.”

The CZI survey showed that the country’s manufacturing capacity utilisation fell by a further 3,3% from 39,6% last year to 36,3% this year, raising doubts over prospects of government’s 3,1% growth projection which was slashed from 6,1%.

Analysts say this decline demonstrates government’s failure to rescue the economy from crumbling.

Finance minister Patrick Chinamasa was last month forced to revise downwards the country’s growth rate from the initial 6,1% which he forecasted during his presentation of the 2014 national budget last December to 3,1%.

CZI on Wednesday released results of its 2014 manufacturing sector survey results which showed that capacity utilisation fell even though weighted capacity utilisation increased marginally from 36,3% last year to 36,5%.

“Industries in Zimbabwe are under serious threat. De-industrialisation has reached catastrophic levels, with dire consequences to the state of the economy. Arresting deindustrialisation will not be an easy task,” the CZI said.

“Both private and public sectors must take action to address the spectre of economic stagnation or decline. The results of the 2014 CZI state of the manufacturing sector survey show a decline in the sector compared to last year.

“The slowdown being experienced in the economy at large has not spared the manufacturing sector. In 2014, average capacity utilisation continued to decline, shedding 3,3% to 36,3%. 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.”