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Capacity utilisation up

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The country’s capacity utilisation levels increased in the first half of the year although the growth was sluggish, a survey conducted on members of the Confederation of Zimbabwe Industries (CZI) in June has shown.

Statistics indicate that capacity utilisation is now averaging between 47%-50% from between 40-45% last year.

CZI president Joseph Kanyekanye said although the capacity utilisation levels had increased there were some sectors such as beverages and soft drinks that are operating at 100% while some low-to-medium enterprises with no foreign shareholding are averaging 25% capacity or less.

“However spurring growth in capacity utilisation from this level is going to take a lot especially in terms of capital injections and rehabilitations of infrastructure, in order to see a significant increase in capacity utilisation over the next few years,” said Kanyekanye.

“When you start at a low rate, a 20% or 30% increase is nothing. Most local products are not competitive. Companies are producing for the domestic market.”

Kanyekanye said despite the capacity constraints business performance for the remainder of the year and 2012 is expected to improve.

Capacity utilisation in local companies is expected to close the year at 56% before increasing to 60% in 2012.

“Although the outlook remains positive, it must be borne in mind that the growth will be at much lower levels than previously anticipated. If current capacity constraints are addressed, industry capacity utilisation will reach 70% by 2015,” he said.

He said industries operating at 25% were facing a high cost base and difficulties in competing with imported products, coupled with low domestic demand.

The report by CZI said volumes of exports in 2011 are expected to register a slower growth of between 10%-20% this year compared to a growth of 20-30% last year.

“However, from the survey it was clear that several companies had still not resumed exports or had export levels declining in 2010 as local products are not competitive on the international market both in terms of cost and quality and this is largely a result of high production cost and lack of technology,” he said.

Local companies are facing working capital problems, high input costs, power outages and high labour costs among other challenges.

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