Manufacturing sector poised for growth

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Capacity utilisation levels for the manufacturing sector is expected to increase to more than 50% this year from 43,7% largely as a result of the operationalisation of the $100 million Zimbabwe Economic and Trade Revival Fund (Zetref), among other facilities.

Minister of Finance Tendai Biti, in his statement on the state of the economy and attendant challenges early this week said the availability of Zetref and signing of the Bilateral Investment Protection and Promotion Agreement (Bippa) with Botswana would enhance the availability of funding for the manufacturing sector.

Through the signing of the Bippa with Botswana, Zimbabwe hopes to unlock P500 million in credit lines.

Capacity utilisation is a firm’s total level of output or production in a given period.

“This facility will go a long way in providing the much-needed medium to long-term capital for industry retooling, and procurement of raw materials at reasonable lower rates compared to those prevailing in the local market,” Biti said.

“These initiatives coupled with the improvement in electricity availability will overally have a positive impact in the manufacturing sector which is expected to grow by 5,7% in 2011”.

Confederation of Zimbabwe Industries president Joseph Kanyekanye said the 50% production level was attainable but government should speedy up on concluding the Bippa agreements on how companies will access the funds.

“We are waiting for the Minister of Finance to put in place the policy on accessing the Bippa funds. The party which requires funding is Zimbabwe and hence should move with speed,” said Kanyekanye.
He said some companies had applied for funding from Zetref.

Kanyekanye could however not give details as to how much money had been disbursed and to how many companies.

Kanyekanye said the manufacturing sector has been accessing short-term loans that were being made available by local banks in the past two years.

He said the funds were still not enough as the sector required $2 billion to ensure complete recovery.

Zimbabwe’s manufacturing sector has been struggling to recover due to lack of resources and funding.

The government last week launched the draft industrial policy that seeks to boost manufacturing sector’s output to 80% by the end of 2015.