Manufacturing capacity utilisation to fall to 30 percent by year end

Zimbabwe’s manufacturing sector is seen falling to 30 percent of capacity by the end of the year on the back of continued challenges that have forced most companies to either downsize operations or completely closing shop, an official has said.

Deputy Minister of Industry and Commerce Chiratidzo Mabuwa told participants at an International Business Conference at the Zimbabwe International Trade in Bulawayo yesterday that the sector was operating at 36 percent but continued to face a number of challenges that would see productivity decreasing.

She said due to the proliferation of imported goods since the country started using foreign currency, most local companies have failed to compete resulting in reduced capacity.

“The capacity utilisation is projected to drop by a further six percent to an overall industry average low of 30 percent by end of 2015,” she said.

Mabuwa added non competitiveness among local companies was due to high cost of production, high utility tariffs, and high finance charges.

‘In addition the continued appreciation of the US dollar against the country’s major trading partners’ currencies has rendered imports to be cheaper making local goods uncompetitive.”

She said attracting foreign direct investment was also curtailed by lack of improvement in the easy of doing business.

“Zimbabwe has not yet improved its ranking on the World Bank Easy of Doing Business Index from 2013 to 2014.”

She said the government as a way of improving the easy of doing business was rebranding the National Incomes and Prices Commission into the National Competitiveness Commission which will specifically target at improving competitiveness of the local products.

To mitigate problems faced by local companies, she said government was working to mobilize financial resources to support industry.

The Ministry, she added, was also finalising a framework for the re launch of the second phase of the Distressed and Marginalized Fund (Dimaf 2).

“This facility is expected to unlock strategic value chains in the economy and improve business linkages among the various clusters.”

She said Dimaf 2 will also address corporate governance challenges that were observed to have contributed to the non-performing of industries or loans extended to companies in the past.- The Source

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