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COVID-19 has been an albatross on the necks of many economies, save for a few.

They registered negative growth last year as a result of the pandemic. The World Bank in its 2021 Global Economic Prospects report out in January this year estimates that sub-Saharan Africa registered an economic contraction of 4,3 percent last year.

It was not all gloom and doom for every economy as Zimbabwe has demonstrated resilience.

Findings of the manufacturing sector survey which was conducted by the Confederation of Zimbabwe Industries (CZI) and which were released on Thursday show that capacity utilisation actually increased to 47 percent from 36,4 percent recorded in 2019. Also, export revenue shot up last year to US$4,7 billion compared to US$4,6 billion achieved in 2019.

The survey attributed the growth to improved foreign currency availability, higher sales and companies’ efforts to retool. The CZI projects that capacity utilisation will further increase to 61 percent this year if foreign currency availability and pro-business policies remain or are deepened.

The encouraging forecast comes at a time the country is also looking forward to a bumper harvest that will see maize production rising to 2,8 million tonnes from around 900 000 tonnes last year and tobacco output of more than 200 million kilogrammes.

“I would like to highlight that we are emerging but we are not yet there,” said CZI chief economist, Mrs Tafadzwa Bandama, presenting the survey findings.

“We are still below 50 percent of capacity utilisation, although capacity utilisation improved from 36,4 percent in 2019 to 47 percent in 2020. This is a low output medium and this is why we say the increase from 36,4 percent to 47 percent in capacity utilisation are green shoots in capacity utilisation performance in a low output medium because we did not manage to overshoot the 50 percent mark.”

She added:

“Industry is hoping and projecting to increase capacity utilisation to 61 percent in 2021. To achieve this 61 percent, they (companies) are asking for a consistent policy environment, exchange rate stability, price stability in the goods market as well as the services market. They are also asking the Government to incentivise the local content policy.”
Indeed, some did not expect industry to grow by that margin last year considering the Covid-19 context and the challenges that the economy had already been grappling with before the pandemic hit last March.

But Zimbabwe often confounds its critics.

Zimbabwe is open for business, President Mnangagwa has always indicated since he came into office late 2017. To that end, his Government has been coming up with many pro-business policies such as amending indigenisation laws, spending within its means, boosting electricity supply, making foreign currency more easily available, discouraging consumptive spending, clamping down on black market foreign currency trading and fighting corruption.

With the economic environment regaining its stability and resources getting more easily available, industry is now scrapping 1950s machinery that broke down too often and was inefficient, importing new, modern machinery of greater efficiency.

Three weeks ago, the Zimbabwe National Statistics Agency released data that highlighted a major shift in the structure of the import bill, with the private sector spending close to US$2 billion importing capital goods for retooling and expansion.

The growth that was achieved last year in terms of capacity utilisation will be sustained if the Government continues on the path it has been since it assumed office.

Foreign currency must be made available in formal banking channels, discipline must be enforced without fear or favour, public spending must always be within budget, electricity must be always available, corruption must be fought and defeated and support for the lifeline agriculture must be intensified.

It is noteworthy that the CZI figures are only relevant to the manufacturing sector and there are many others such as mining and agriculture, which is closely linked to manufacturing.

We don’t think mining performed badly last year as it was among the essential services sectors that were allowed to run despite Covid-19. Yes, tourism was hit the hardest by the pandemic, so we don’t expect any growth in that industry, just survival.

But overall, manufacturing industry performance is indicative of the overall health of the economy. The green shoots are there and growing in number. Last year was exciting as CZI reported, despite the challenges brought by the Covid-19 albatross. If the manufacturing industry performed the way it did despite the worst of the pandemic, we’re positive about broad economic prospects this year and beyond.