Zim manufacturing sector capacity utilisation shrinks


Capacity utilisation of Zimbabwe’s manufacturing sector declined 11.85 percentage points to 36.49% in 2019 from 48.2% in the previous year, according to a Confederation of Zimbabwe Industry 2019 survey released Friday.

This demonstrates the failure of both government and private-sector efforts to arrest de-industrialisation mainly due to the absence of funding to bailout struggling local companies, serious energy challenges, rising inflation, depressed consumer spending, which is also expected to remain constrained.

The resultant crisis has also seen the cash-strapped companies battling to raise monthly salaries for their workers.

The industry players project capacity utilisation to further decline this year to 27%.

About 88% of companies highlighted they were facing difficulties to access foreign currency from the interbank market which they said was inefficient.

About 78% of the firms predicted that the economy will be in recession.

“Industry is constrained due to challenges including energy, inflation, foreign currency shortages. Capacity utilisation across all sectors was below 50%. For the outlook, it’s not looking good. The capacity utilisation is expected to fall further to 27% this year,” Tafadzwa Bandama, CZI chief economist told guests at the launch of the survey in the capital.

World Bank senior economist, Stella Ilieva said: “It’s difficult to find a bright colour here in Zimbabwe. Economic growth has deteriorated sharply. The recovery is very fragile. The risk for a recession in 2020 is very high as another drought is looming.”

Industry and Commerce minister Sekai Nzenza said: “There is absolutely no doubt that we are going through a bumpy road. I must accept that inflation remains very high. There is also uncertainty in the market. But, I still have confidence that Zimbabwe will be out of this.”

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