The cotton industry is also being prevented from accessing the EU markets, except through middlemen, which has resulted in the loss of 5-10% of the value of produce. The cotton industry used to export products valued at USD50 million and it is now getting less owing to the inaccessibility of the EU markets. In addition, the industry is failing to pay for inputs, spare parts and machinery to companies outside the country.
Mining Industry
Zimbabwe’s economy depends heavily on its mining industry, which accounts for about 8% of GDP, 70% of exports receipts and employs about 36 500 people. The two major parastatals, Zimbabwe Mining Development Corporation (ZMDC) and Minerals Marketing Corporation of Zimbabwe (MMCZ), which provide vital services to the sector are under unilateral coercive measures and the following is instructive:
ZMDC, responsible for mineral production and development is prohibited from conducting financial or commercial transactions with global business entities posing serious viability and liquidity challenges. Sales from operational mines are limited to those who are willing to trade with Zimbabwe and thereby negatively impacting on the market size and mineral prices.
MMCZ, which is responsible for marketing the country’s minerals is also under unilateral coercive measures, constraining its operations. Sales proceeds are being confiscated and payments to creditors in US dollars are also withheld, with detrimental effects to the viability of the mining industry. A total of USD1.5 million belonging to miners, MMCZ, and Government has been blocked to date. Mining value chains and the industrial forward and backward linkages
Manufacturing Industry
The manufacturing sector’s performance deteriorated markedly from 24% of GDP in 1999 to 13.1% in 2016. The cumulative effect of the coercive measures has resulted in high cost of borrowing (with interest premiums as high as 18%), obsolete technology, shortage of spares, loss of export markets, low levels of long-term finance to enable re-tooling and low aggregate demand. As a result, manufacturing capacity utilisation fell from 70-76% in the 1980s to an all-time low of 10% in 2008.
Strategic companies such as Chemplex and ZimPhos, involved in the production of phosphate fertilisers were negatively affected by the unilateral coercive measures, threatening their long-term viability. The impairment caused by the measures have increased the overall cost of production resulting in expensive fertilizers, which ultimately threatened food security. Large companies like Olivine Industries (a major player in the cooking oil industry) where the Zimbabwean Government owned equity, was forced to close shop in 2019 as a result of viability challenges. Closure of companies over the past two decades in the manufacturing sector has resulted in high levels of unemployment in the country.
The negative performance of the national economy, which has resulted in decreased agricultural output, has also impacted negatively on the manufacturing sector, given the backward and forward linkages between the two sectors.
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