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Business Reporter
SEVERAL manufacturing companies that benefited from Statutory Instrument 64 have embarked on a retooling exercise in a bid to improve the quality of their products and enhance business viability, a Treasury report shows.

Exactly a year ago, the Government enacted SI 64/2016, which restricts importation of a range of products that are available locally. The bold move followed an outcry by industry players who faced fierce competition from cheap imports.

A latest Treasury report indicates the manufacturing sector is poised for growth this year with more gains being supported by SI 64.

“The benefits from the implementation of Statutory Instrument 64 and value chain strategies are expected to support activity in the sector. Furthermore, some companies in several subsectors have embarked on retooling exercises in order to improve product quality and business viability,” reads part of the report.

“Growth for the manufacturing sector is projected at a modest 0.1 percent in 2017 on account of ongoing Government initiatives to improve the business environment as well as the growing use of plastic money and e-transactions that is easing the liquidity challenge for the benefit of the industrial activities.”

Figures from the Ministry of Industry and Commerce, which are included in the Treasury report, further buttress how the implementation of SI 64 and other SIs has witnessed improved manufacturing capacity utilisation.

As at March 2017, tinned foods and vegetable makers led the movers with 42 percent capacity increase to 80 percent from 38 percent before June 2016.

Fertiliser and plastic packaging manufacturers have also made inroads of 15 percent and 23 percent capacity increase to 40 percent and 60 percent respectively.

Personal care products are now operating at about 50 percent capacity from about 30 percent last year. Among other notable highlights is the five percent increase in tyre manufacturing to 35 percent from 30 percent and 33 percent increase in synthetic hair production to 55 percent from 22 percent last year.

Following the good rains and the anticipated bumper harvest, hopes are high that agro-processing industries will also record more gains.

Already cooking oil manufacturers, yeast, biscuits and detergents producers are among the pack of companies whose production has recorded significant growth riding on the benefits of SI 126 of 2014, which also controls importation of these products.

Although, manufacturing sector capacity utilisation improved significantly since promulgation of SI 64 and other Government policy interventions, Treasury admits that progress continues to be constrained by foreign currency shortages that are negatively affecting the importation of critical raw material supplies and capital equipment. Industry also suffers from utility and infrastructural gaps that have been blamed for increasing the cost of doing business, which makes local products uncompetitive.

Concerns have also been raised about porous border posts through which cheap imports find their way into the economy and crowd demand for local products. High costs of borrowing have also been cited with regards to access to affordable finance for working capital and retooling.