Reviving the country’s industrial capacity will require at least $4 billion in the next few years, with at least $1 billion required next year if the nation is to continue on the growth path.
Most companies’ production capacity has remained below 50% as a result of a plethora of viability problems.
Zimbabwe’s economy is expected to grow by between 7,8% to 9% next year compared to 9,3% this year. Domestic capacity utilisation is projected to increase to 60% and in the process reduce imports, in particular of basic commodities.
According to the 2012 Budget Strategy Paper launched last week by Finance minister Tendai Biti the funds would make it possible for industry to address lack of capital, antiquated machinery, high labour costs and old technologies that have rendered most industries uncompetitive.
Some of the sectors hardest hit by challenges have been identified as clothing and textiles, leather products, pharmaceuticals, agro-processing and the dairy sector.
“It has been estimated that resources required to address capacity constraints facing industry amount to at least $4 billion, with the requirement for 2012 placed at about $1 billion,” reads part of the strategy paper.
“In order to attract the required investment in the productive sector, there is need to build business confidence, as well as address issues impacting on productivity. It is therefore critical to promote good corporate governance, sustain macro-economic stability, develop infrastructure, ensure protection of property rights and flexibility of labour laws.”
Biti said given the capital requirements of industry and low domestic credit capacity, it was critical that the country mobilised credit lines from regional and international financial institutions.
He said in 2012 agriculture and mining would remain the major drivers of growth while tourism, manufacturing, transport and communication would also contribute to the growth.
Biti said despite the general rebound in economic activity, there were some sectors as well as economic entities whose participation had remained distressed.
“It is in this context that there are ongoing consultations regarding revival of industries such as those in Bulawayo, Gweru and other parts of the country,” reads the strategy paper.