Manufacturing capacity utilisation falls to 48%

LETTICIA MAGOMBO

The manufacturing capacity utilisation fell to 48% in the second quarter of the year from 56.25% at the end of 2021, a new report by the Zimbabwe National Statistical Agency (ZimStat) shows, illustrating that more than half of the productive assets are idle.

The drop in capacity utilisation in the period under review came at a time when the economy was experiencing high volumes of economic instability owing to an unstable exchange rate and rising inflation which put major constraints on businesses.

Confederation of Zimbabwe Industries (CZI) chief economist Cornelius Dube said the second quarter of the year was hectic for business as the parallel market exchange rate was always on the up and the exchange rate premium was at its highest.

He added that the figure was an indication of the lack of activity in the sector.

“What is more important is if we say capacity utilisation is at 48% it means we are saying about 52% of the productive assets in the manufacturing sector are idle. I think that is the implication as we move forward.” Dube said, adding the figure was an indication of the need for drastic changes in the sector.

“What it means is that assets in the manufacturing sector are not sweating otherwise we probably don’t need to have new investors coming in with new plants and equipment when the existing plants are actually idle. I think that is a serious implication from the capacity utilisation figure which is the message that policy makers need to know, that is, to what extent can we make assets work. Is it the policy environment?”