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‘Manufacturing sector in intensive care unit’

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CAPACITY utilisation in the manufacturing sector has plunged to 39,6% this year from 44% in 2012.

CAPACITY utilisation in the manufacturing sector has plunged to 39,6% this year from 44% in 2012 showing that the sector is in the intensive care unit and in need of help, the president of Confederation of Zimbabwe Industries (CZI) has said.

Victoria Mtomba

Speaking yesterday at the launch of the Manufacturing Sector Survey breakfast meeting, CZI president Charles Msipa said nothing much had changed in the sector since last year as the problems of power and lack of working capital continued to haunt the industry.

“We are (manufacturing) in the intensive care unit, but the good news is that a lot of the factors are within our control. We can make a decision to project where we want to be in terms of capacity utilisation next year,” he said.

Since the adoption of multiple currencies in 2009, capacity utilitisation had been on an upward trend before dipping in the last two years.

In 2009, it rose to 30% from 10% in 2008 before rising to 43,7% in 2010 and  57,2%  in 2011.

CZI chief economist Lorraine Chikanya said from the 250 respondents surveyed, only 35,7% recorded capacity utilisation of above 50%. CZI conducts the survey annually.

She said low confidence had deterred potential capital inflows hence the resultant liquidity constraints in the economy.

The sector is facing challenges that include lack of affordable working capital, unavailability of economic enablers such as electricity, antiquated machinery and low domestic demand.

“In addition, lack of long-term funding has adversely affected this sector. The manufacturing sector also requires expertise and skills, research and development,” Chikanya said.

According to the survey, export sales increased to 20% from 18% in 2012 while  Zambia was the top destination of manufactured exports. South Africa’s market share increased to 18% from 12% and still remained the country’s major trading partner.

Chikanya said respondents showed that South Africa was the major competitor with local products while China came second.

At least 40% of the respondents had undertaken capital investment in particular to purchase equipment and machinery.

The survey also showed that 5% of the money sourced by local companies came from foreign direct investments.