Manufacturing sector companies’ investment plunges to US$100m
ZIMBABWE’S manufacturing sector firms invested a total of US$101 million into their businesses last year compared to US$147 million in prior year, as industry faced liquidity constraints following government interventionist measures, a new report has revealed.
Desperate to save an imminent collapse of the domestic currency, authorities last year introduced a cocktail of measures such as raising interest rates to 200% and suspending payments to government contractors. The interest rates were later cut to 150%.
Owing to economic mismanagement, the manufacturing sector’s share of Zimbabwe’s gross domestic product (GDP) has declined from a peak of around a quarter in the 1990s to less than a fifth now.
According to Confederation of Zimbabwe Industries (CZI) annual manufacturing sector survey, it is estimated that there are 4552 manufacturing firms with at least 10 employees. The survey shows that these firms expanded their capacity by 30%. In 2021, such firms added 26% capacity.
A survey of 409 manufacturing firms by the CZI showed that capacity utilisation – actual output measured against potential production capacity – flat-lined on the 2021 figure. In 2021 capacity utilisation rose to 56.25% from 47% the previous year. This was the highest level since 2012.
The survey shows that about 40% of firms invested in 2022 and this was an increase from 38% in 2021.
The drinks and tobacco sub-sector registered highest increase in capacity utilization (%) while textiles and ginning had largest drop.
Textile and ginning, the study shows is the only sector with more predicting a worse 2023 than 2022.
Turning to exports, the survey showed that 19% of the firms were into exports and nearly a quarter of their output is sold outside the country. On the flip side, import input increased due to unavailability of raw materials locally.
The survey shows that 54% of manufacturing companies import due to unavailability of throughput locally while 26% import due to lower prices compared to sourcing domestically.