Capacity utilisation to drop to 30%: CZI

07 Oct, 2019 - 00:10 0 Views
Capacity utilisation to drop to 30%: CZI Confederation of Zimbabwe Industries

The Chronicle

Prosper Ndlovu, Business Editor

MANUFACTURING sector capacity utilisation is projected to drop to about 30 percent this year from 48 percent in 2018 due to negative macro-economic factors that hit Zimbabwe since January, the Confederation of Zimbabwe Industries (CZI) has said.

While Government has laid out progressive policies guided by the Transitional Stabilisation Programme (TSP) and Vision 2030, the largest industry body said the manufacturing sector has this year suffered from numerous constraints that have eroded the gains achieved in the previous year. 

CZI Matabeleland Chamber president and group CEO of Sheppco BMA Fasteners, Mr Shepherd Chawira, said the surveys being conducted among their members were showing a negative state of industry, evidenced by subdued production.

He made reference to a dash board of headwinds facing the industry and the country at large that include; negative growth projections induced by drought and climate change effects, high inflation, exchange rate volatility, electricity and water shortages, acute forex shortage, increased cost of doing business, unemployment and the resultant drop in aggregate demand. 

“We are this year forecasting at around 30 percent, which is down from about 48 to 50 percent, which was last measured in January. 

“We also have a challenge of unnecessary importation of goods and services consuming 82 percent of our import expenditure,” said Mr Chawira. 

“With these factors there is no doubt that our industry is faced with many challenges as our country is in a deep economic decline. These factors, while they are many, they differ in a way they have affected business. 

“Leading the pack is electricity, together with water. 

“Electricity is a major challenge with industry enduring up to 18 hours without power. Electricity has reached crippling levels. We are using diesel generators to power industry and it has led to massive cost increases and is not sustainable.” 

According to Mr Chawira, industry is third largest consumer of water after agriculture and domestic consumers and its shortage in major cities negatively affects production. 

“Sadly, the big cities where our industry is located (Harare and Bulawayo) have water challenges. 

“There is no doubt that energy and water, coupled with other challenges, have put industry in a downward trajectory,” he said. 

“With capacity utilisation set to drop to around 30 percent, we need urgent interventions to keep the country on track towards Vision 2030.”

Mr Chawira, who attended the water, sanitation, energy and industry nexus conference in Bulawayo last week, urged Government to channel more support to the manufacturing sector to save the country from imports, which are draining millions of foreign currency from the economy. 

“One thing in common is that we all seem to agree at every platform that our challenges in Zimbabwe are being caused by low productivity and solutions, therefore, lie in addressing challenges faced by industry to take us out of this situation,” he said. 

“Unless we prioritise industry it will remain a pipe dream to turn around this economy.”

The CZI boss said the manufacturing sector believes in Vision 2030 and was ready, given all the support, to partner the State by capacitating and giving the productive muscle needed by the economy.

“We implore Government to make the environment more conducive in energy investment, agriculture and other sectors. We believe in a private sector led economic development,” said Mr Chawira.

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