Zimbabwe’s industry capacity Utilisation rose by 11 percentage points to 47% in 2020 from 36,4% in 2019 buoyed by improved foreign currency availability, increased sales, retooling, Confederation of Zimbabwe Industries (CZI) revealed this week.
Announcing the 2020 CZI state of manufacturing sector survey said notwithstanding the increase in capacity utilisation the country’s industry is saddled by lack of working capital, loss of domestic and export Markets, infections at the workplace and high cost environment due to Covid19 response measures.
While manufacturing companies had a torrid time accessing Foreign currency in the first half of 2020 the survey however indicated that the establishment of the forex auction system in June last year gave manufacturing companies breathing space.
Companies welcomed some measure of stability in the exchange rate, which in turn tamed inflation as the official exchange rate became the major determinant in the pricing equation.
“ It is encouraging to note that business can now access foreign currency through the formal channels although its now taking longer to access foreign exchange.Certainty and predictability has been introduced in the economy.The Auction is fostering some measure of confidence and trust in the policy making and implementation process,” said CZI chief economist Tafadzwa Bandama while presenting the survey.
“During the second half the foreign currency auction system had assisted in the discovery of a market-based exchange rate.Thus minimising distortions in pricing especially indexation of prices to the parallel market exchange rate.The market based exchange rate system has assisted in dampening pressures on inflation.”
As of February 2021, more than 70% of total foreign currency allotted had gone towards the importation of raw materials, machinery and equipment.
Despite the covid 19 induced lockdown that prevailed the better part of the year processed foods recorded an 18% increase in exports from US$98 million in 2019, to US$115 million in 2020.
Top export products included Sugar – US$76 million,Fruit juices – US$5,6 million,Pastry products – US$3,7 million,Tobacco products – US$54 million
CZI said government need to address the Currency Issue, Stabilise the exchange rate and inflation,Tight control of Reserve Money, Financing Quasi Fiscal Operations from the Fiscus.
More so, government must Improve the doing business environment to promote exports as well as Improving the efficiency of public transport system.
The industry lobby group said capacity utilisation in 2021 is projected to increase to 61% on the back of Consistent policy process,currency stability ,exchange rate stability, inflation reduction, Export promotion and Buying local.
“Government must establish a Business Support Facility – working capital,Covid19 and Public Health Response Measures,Ample notice period before the implementation of national lockdown.
Guidelines on exemptions and non-exemptions to avoid confusion.The implementation of a well-communicated covid19 vaccination strategy,Public policy should prioritise investing in social infrastructure especially in the health sector, and water provision,” Bandama said.
CZI said manufacturers must develop strong industrial linkages and value chains,focus on the domestic market penetration then exports Import substitution by producing own maize, wheat and soybeans – save forex.Improve energy efficiency and energy mix, Embrace e-transactions To achieve new levels of competitiveness by adopting and adapting to new technology