The Confederation of Zimbabwe Industries (CZI) Tuesday said undercapitalisation slowed the performance of the manufacturing sector this year and hinted the industry required at least
$2 billion to recover.
In its 2010 manufacturing sector survey, CZI said the industry is utilising just 43,7% of available plant capacity, a marginal improvement since last year.
CZI president Joseph Kanyekanye blamed this economic slowdown on funding constraints and the shortage of affordable and correctly-structured credit facilities.
A majority of local lenders are not going beyond 90 days.
“The growth for the manufacturing sector has been sluggish,” Kanyekanye said.
“Our major challenge this year was accessing lines of credit. We’ve not put in the required funding. If you don’t put money in the manufacturing and agriculture sectors, problems of unemployment and imports will continue.”
“There is need for recapitalisation on a medium-term basis. The funds that the manufacturing sector needs should be for 2-5 years. Clearly if we had external funds the economy would have grown by double digits.”
Kanyekanye said the cost of services to the manufacturing sector had remained high while the issue of power affected businesses throughout the year.
He said bank charges and lending rates were too high.
Kanyekanye also said government needed to address the issue of debt and international relations for businesses to thrive.
The ratio of debt to gross domestic product is
estimated at about 150%.
“This is unusual. In history if you have a debt like that you have to deal with the debt. You can try to reschedule or cancel the debt.”