Drop in the ocean: Economists slam funding for industry

LIVINGSTONE MARUFU

A recent ZWG300m  cash injection by Treasury into Zimbabwe’s ailing manufacturing sector has been dismissed by leading economists and industry leaders as grossly inadequate, with calls mounting for a massive capital injection to restore competitiveness, modernise plants, and unlock industrial growth.

They said the sector, already battered by years of underinvestment and policy inconsistency, requires billions—not millions—to resuscitate.

Economist Tinashe Kaduwo told Business Times the allocation should have been directed toward small and medium-sized enterprises rather than larger firms.

“In practical terms, ZWG300m (  equivalent to just US$11.5m at the official rate of ZWG26.81) is a drop in the ocean. Consider that modernising just a single medium-sized food processing plant or textile mill can easily cost upwards of US$2m in retooling and energy systems. Rehabilitating an entire sub-sector—such as metal fabrication or agro-processing—can require tens of millions of dollars,” Kaduwo said.

Another economist Vince Musewe was equally critical, stating that the injection will do little to stimulate industrial growth.

“That’s very little given the fact that our industrial technologies are antiquated. Seems a piecemeal approach to me. The government must focus on rehabilitating industrial infrastructure as a matter of urgency. The last time I checked, we needed around US$20bn to do so,” Musewe said.

CEO Africa Roundtable chief executive Kipson Gundani said the sector requires a robust and well-structured revolving fund to spur meaningful industrial recovery.

“US$11.5m, for a sector that has been underfunded for many years, cannot have a notable impact on the economy. It may help one or two firms, but it will not influence capacity utilisation or total manufacturing output. Injecting US$11.5m into a sector that needs over US$600m will not move the needle,” Gundani said.

“What is needed to resuscitate the manufacturing sector is a suite of measures, including the establishment of a multi-million-dollar fund that is accessible at affordable rates. More importantly, the government must reorient its policies to allow the sector to access financing from mainstream banking institutions. Right now, the small injections of capital are quickly lost from the formal system and do not yield tangible benefits.”