ZIMBABWE’s industries were much busier in 2020 despite Covid-19 induced lockdowns, which grounded the economy for about seven months, according to a report presented by the Confederation of Zimbabwe Industries (CZI) yesterday.
The CZI said capacity utilisation increased to 47% during the period, from 36,4% the previous year after firms were able to access cheaper foreign currency from the auction system introduced by the Reserve Bank of Zimbabwe in June.
Many companies had acknowledged the positive impact of the forex auction system prior to yesterday’s global report.
These included the Australia Stock Exchange listed resources firm Zimplats which said on Wednesday it had saved over US$5 million after the forex system calmed the markets during its half year reporting period which ended in December 2020.
“Capacity utilisation rose by 11 percentage points to 47% in 2020 from 36,4% in 2019 (due to) improved foreign currency availability, increased sales, re-tooling,” CZI chief economist Tafadzwa Bandama said.
She projected capacity utilisation to rise to 61% this year, saying the economy would be helped by an aggressive vaccination programme that kicked off two weeks ago.
This is expected to see more industries returning back to operations as health fears fall away.
Companies have also said they were kept much busier last year because the local market demanded more domestic products after borders were closed by governments to contain the pandemic.
Zimbabwe imports most of its requirements from neighbouring South Africa.
South African products land on the domestic market much cheaper compared to local goods even after factoring in duties and transportation costs.
The CZI said exports in processed foods increased by 18% last year, with revenues rising to US$115 million against US$98 million in 2019.
It said top export products included sugar, which generated US$76 million, fruit juices which brought in US$5,6 million, pastry products at US$3,7 million and tobacco products, which earned the country US$54 million.
“The official exchange rate became the major determinant in the pricing equation. It is encouraging to note that business can now access foreign currency through the formal channels although it’s now taking longer to access foreign exchange,” Bandama said.
She added that certainty and predictability had returned to the economy, as the auction system was fostering some measure of confidence and trust in the policy making and implementation process.
The industry body said many companies exported goods last year but volumes were low.
The CZI proposed that government must address the currency crisis to stabilise the exchange rate and inflation.