CZI reviews capacity utilisation target

CZI president Sifelani Jabangwe

The Confederation of Zimbabwe Industries (CZI) reviewed its capacity utilisation target for the year downwards to between 50 and 60 percent from the projected 65 percent by year-end due to a shortage of foreign currency to buy critical raw materials.

Last year, capacity utilisation, which is a measure of industry’s use of installed productive potential, rose to 47,4 percent, up from 34,3 percent in 2015 due to the positive impact of import management programme.

CZI president Sifelani Jabangwe told the media that they had settled for 65 percent basing on the success Command Agriculture Scheme. “We have initially pegged our capacity utilisation to 65 percent this year due to economic measures put in place by Government and the success story of the command agriculture scheme.

“But due to the shortages of foreign currency and delays in telegraphic transfer payments for critical raw materials we expect capacity utilisation of the manufacturing sector to between 50 percent and 60 percent.

“We believe that the 65 percent capacity utilisation levels could be achieved if the foreign currency issue is addressed. There’s need to review the import priority list to ensure that the most critical payments are attended to first then others later,” said Mr Jabangwe.

If the sector manages to achieve 60 percent capacity utilisation it would be its highest level since dollarisation in 2009. Post dollarisation capacity peaked at 57,2 percent in 2011, before dropping to 44,2 percent in 2012, 39,6 percent in 2013 and 36,3 percent in 2014.

While some retailers say it is taking up to two weeks for telegraphic transfers to reflect in their suppliers’ accounts, industry representatives last week said some transactions that were originated as far back as April are still outstanding. Resultantly, imports of both finished products and raw materials have been adversely affected.

“To achieve the 60 percent mark, Government needs to deal with corruption, policy consistency, access to cheap finance, smuggling of restricted goods and low demand for domestic products, which are an impediment to the growth of the manufacturing sector.

“The country should also capitalise on the success of the Command Agriculture Scheme to ensure sufficient supply of raw materials which had been affected by successive droughts in the past,” he said.

Mr Jabangwe said there is also need to come up with concrete strategies to settle debts owed to international money lenders in order to unlock fresh lines of credit and create fiscal space.

“Private sector is expecting to work closely with Government on ways to tackle the liquidity crisis. We expect to see more support for local industries on a sector-by-sector basis to further boost the economy and reduce import dependence and stimulate exports. This should be a Government-private sector effort.”

The industrial body conducts the most comprehensive private sector-led survey, which assesses industrial performance. At least 15 economic sub-sectors are surveyed, including clothing and textile, pharmaceuticals, grain and milling and oil processing.