THE decline in capacity utilisation levels is a sad development for companies as it is likely to result in more job cuts, Zimbabwe Congress of Trade Unions president George Nkiwane has said.
By Business Reporter
Nkiwane said the 39,6% decline in capacity utilisation recorded by the manufacturing sector this year from 44% in 2012 showed that poverty levels would increase as more people would not have incomes.
“There is need for government, business and labour to come together to formulate policies. There is a lot of policy inconsistencies in this country, but if the stakeholders sit down, then the policies would be clear to everyone,” Nkiwane said.
“For instance, the indigenisation policy is not clear on whether the assets will be paid for or they will just be taken. We are always as a country coming up with new blueprints which scare away investors as they do not have the confidence whether the policies in place will stay.”
Local economist Daniel Ndlela said the financial services sector should play a positive role to enable companies to access funding that would assist them in purchasing raw materials.
“Working capital is the key issue for the manufacturing sector,” he said.
Ndlela said government should invest taxes collected from companies into industries than channelling them elsewhere.
He added that there was a lot of interest for investment in the economy as the expected returns on investments were generally high compared to other markets.
In 2009, capacity utilisation rose to 30% from 10% in 2008 before rising to 43,7% in 2010 and 57,2% in 2011.
The manufacturing sector is faced with lack of working capital, high utility bills and old antiquated equipment.
Confederatio of Zimbabwe Industries chief economist Lorraine Chikanya on Wednesday said from the 250 respondents surveyed, only 35,7% recorded capacity utilisation of above 50%.
The manufacturing sector, since 2009, has been growing, but it is expected to decline this year by 1,5% from 2,3% last year.
The growth projections of the economy were revised downwards to 3,4% due to reduced revenues to the fiscus.