2014 revival year for industry: CZI

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THE Confederation of Zimbabwe Industries (CZI) has said 2014 is a critical year for the industry to recover from an accelerated decline in recent years, its president has said.

Tarisai Mandizha,Business Reporter

According to the manufacturing sector survey, the industry’s capacity utilisation plunged to 39,6% in 2013 from 44% recorded in 2012.

The decline in capacity utilisation was attributed to erratic power supply, influx of cheap imported goods, antiquated machinery and high labour costs, among other things.

In an interview with NewsDay, CZI president Charles Msipa said the 2014 National Budget had set the tone for stimulating activity in the manufacturing sector although funding remained a challenge. Finance minister Patrick Chinamasa last month proposed a cocktail of measures to turnaround the sector, which at peak contributed a fifth of the economy.

Critics say the underperformance of local industries has resulted in Zimbabwe becoming a net importer.

“We need to point out, if there are areas which need critical attention for the revival of the local industry. The year 2014 is the critical year for us to start to at least arrest the decline experienced in 2013,” Msipa said.

Msipa said the Finance minister on December 19, 2013 presented a Budget which contained many position pronouncements for the industrial sector.

“One of the policies presented is the re-introduction of export incentives, but what exactly are the incentives and how do we operationalise?

“We need to put the details on how it should be implemented,” Msipa said.

He said the other policy which was critical to attract investment was the setting up of special economic zones which he said needed proper consultation and research to ensure success.

“The first order of business is to understand the positive policy in the Budget that needs to be attained to actually be able to understand them,” he said.

He, however, said the other critical area for the industry was the shortage of capital in the market.

Msipa said there was need to create an enabling environment to attract capital and the public and private sector should double their effort to attract capital on Zimbabwe.

“What is happening is the shortage of capital, ever since we adopted the multi-currency system. It is very important that the public and the private sector should double efforts to attract capital,” Msipa said.

Government has since the introduction of multiple currencies in 2009, put various initiatives aimed at reviving struggling companies.

12 COMMENTS

  1. i think it is a fundamental attribution error to cite “high labour costs” as a contributing factor to the decline in capacity utilisation. Salaries in Zimbabwe are not comparable to regional salaries and most employees in Zimbabwe earn salaries way below the PDL. maybe the writer meant top management perks such as the Happison Muchecheteres are earning, which to me are not “high labour costs”, but a rot corporate governance.

  2. i hear Reckitt th company tht manufactures nugget shoe polish hs shut dwn n many more companies will not open after holidays.more thn 50per cent companies will stop production n wil survive thru importing.czi is just talking nonsense.thy know like every 1 else whts wrong.they must start talking nw n save our nation.tell thm openly our dear president must just take a rest.indigenazation must b done away with.new ideas r needed 2 resursitate zimbabwe.zimbabweans,czi,churches,academics,vendors evry 1 must stand up n shout.thy will hear.w cant go back 2 2008 again

  3. @Samaita- Your heart appears to be in the right place but in this land who really cares if the ship Zimbabwe called were to sink today? Not our political leadership, of this you can bet your last goat!

  4. Zimbabweans can start industrial regeneration one Solar panel at a time.

    We are blessed…we can count our blessings.

    We can learn to appreciate what we do have rather than what we do not..

    Apathy and pessimisim have no place Mr Falcon.

    We need to reenergise!

  5. In Zimbabwe people are just goot at talking without taking action.A good example,no action is being taken to revive CAPS such a viable industry.NSSA is building a shopping complex in Chipinge and Investing collapsing banks,they must also invest in Industries which have got potential to export.

  6. As long as certain Laws are not Reversed ,Zim Industries wil continue to Slide to a total collapse leaving more People jobless,the Government must swallow their Pride and Reverse their So called Flop Empowerment Policies and also Relax certain laws to attract Foreign investors which to me are a quick remedy for the Ongoing economic challenges.

  7. Our country is full of selfish individuals who think of themselves first. Greed is influencing the erosion of working capital. The salary structures of top management is ridiculous in almost every organisation in this country. There is no relationship between the earnings and productivity. Salaries and perks of top management have become fixed costs. PG INDUSTRIES run by a CA Hilary Munyati left seke road head office because of the high rental costs, noble as that maybe his salary did not have a downward variation. His acknowledgement that the labour costs were high saw him and evil carol mapupu (HR) restructuring everyone serve for themselves. Recently they gave themselves a salary increment in the guise of motor vehicle scheme. The company is bleeding but their spending patterns are not. They send their children to expensive schools using money that can restock empty branches ,they frequent their travels and mop the little bit of cash available in the company through allowances.They make continuous losses and they are rewarded for it.They cant be questioned even by the so called BOARD. NONSENSE. Good corporate gorvenance is the only answer to resuscitation of industry. Why pay a person because they have an MBA,MBL,CIS,PHD when they cant produce results. To hell with that CA rubbish if used to benefit individuals ,be productive with that CA or quit.

  8. I think more often we miss the point. Industries are not producing because it is expensive to produce from Zimbabwe than to import. This is so because our machinery is now obsolete. Its costs maybe 5 dollars for Olivine to produce a 2ltr bottle of cooking oil because of the type of tools they are using yet imported D’lite will cost you 4 dollars. What we need is retooling of our industry. We can go on and on about all the other nitty gritties but as long as we do not have new, technologically advanced tools to make products locally we are doomed. I read the other time that Dairibord was importing milk because producing the same locally was more expensive. Lets mobilise resources to buy new machinery for our industry then we can talk of exporting and importing less. Doing it now will lead to a shortage of goods, which will in turn lead to an increase in prices which will translate to burden for the ordinary man out there. Lets look beyond…

    • Paying the MD obscene salaries is not nitty gritty, it is the whole enchilada! Why not fire the MD and use his salary to retool? Most of these companies need less than 100k to restart them, but how on earth can they do this when the robber MD is cashing in big time?

  9. Retooling and updating the machinery is part of the solution. Good leadership and corporate governance is key in the resuscitation of the dead industry. Most industries benefited from rights issue and debt to retool the business but no positive results. PG has failed dismally from both debt and equity funding. Executives in Zim have become cry babies busy lining their pockets. All you get are excuses, costs of zesa, water, labour and all the other raw materials. We need to be serious and look at our business models in totality including the services we are offering. Strong and rational board members are required not those that go into a pub at 8pm with the CEO and emerge out of a pub at 2am on the back of a CEO that will drive them home

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