ZIMBABWE’s manufacturing sector is in dire need of $200 million funding to enable it to continue producing and supplying the local market, the Confederation of Zimbabwe Industries (CZI) has said.
The development comes at a time when the country’s manufacturing sector is left with one month supply of raw materials.
CZI president Sifelani Jabangwe told Business Times that the pharmaceutical sector and agro-industry are the most affected and urgent funding was required to help the sub-sectors.
“Currently, the manufacturing sector and its sub sectors need a total of $200 million to continue producing for the local market. As we are left with around one month supply of raw materials, we anticipate the authorities to walk their talk on allocating us foreign currency as quick as possible to avert the looming crisis.
“Most affected areas which we believe should be addressed first are pharmaceuticals and agro-processing sub sectors whose stocks have already depleted,” said Jabangwe. He said the sector neesd a total of $2 billion to retool, reequip and improve operational levels.
The local manufacturing sector hit its peak in the 1990s, contributing around 16 percent to the country’s gross domestic product (GDP).
It played a key role in the economy, supplying about 50 percent of its output into the agricultural sector while 63 percent of its inputs were from the agriculture sector.
The Reserve Bank of Zimbabwe (RBZ) allocated a cumulative figure of $1 billion, towards supporting companies in the manufacturing sector in 2018. Manufacturing sector’s export earnings were $222 million and if this amount is deducted from a manufacturing sector allocation of $1 billion, this means the sector has a trade deficit of over $800 million.
During a meeting with industry representatives last week, Industry and Commerce Minister Mangaliso Ndlovu said given the amount of foreign currency allocated to the manufacturing industry last year, the companies should not increase basic commodities as it defies the logic of allocations to them.
The CZI 2018 manufacturing sector survey shows that average industrial capacity utilisation grew by 3,1 percentage points to an average of 48,2 percent between August 2017 and August 2018 with foreign currency and policy inconsistency cited among the major drawbacks.
Ndlovu said there was an inverse relationship to the value of exports generated despite the significant support Government availed to industry last year in the form of scarce foreign currency for the procurement of raw materials.
Local manufacturers said the companies are struggling to export due to lack of competitiveness mainly due to factors such as high labour costs, use of a strong currency, high utility bills and difficult export procedures. However, the contribution of the manufacturing locally cannot be underestimated as the cooking oil expressers, grain millers and beverages manufacturers manage to adequately supply the local market