Manufacturing Sector Set for Recovery, Capacity Utilisation to Rise – Minister

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HARARE – The manufacturing sector in Zimbabwe is expected to record significant recovery, with capacity utilisation projected to rise from an average of 52.1 percent in 2023 to over 55 percent by 2025, The Herald reports.

According to Industry and Commerce Minister Mangaliso Ndlovu, the anticipated growth comes on the back of targeted government interventions aimed at improving industrial performance and reducing dependence on imports.

Speaking on the developments, Minister Ndlovu expressed confidence in the government’s strategy to revitalise local industry.

“The Government is reaffirming commitment to support local industry, and this is emanating from our thrust to consolidate the current gains. We shall do more to enhance growth, riding on current strides and taking stock of progress through monitoring and evaluation,” Minister Ndlovu said.

Key measures driving this recovery include the rollout of a retooling funding facility, maintenance of a stable macroeconomic environment, reforms to improve the ease of doing business, and the implementation of an efficient willing-buyer-willing-seller foreign exchange market. These efforts are expected to enhance production capacity, improve competitiveness, and significantly ease Zimbabwe’s import bill, particularly for essential goods such as groceries.

Mixed Performance in Sub-Sectors

Despite a stable overall output, data from the 2023 manufacturing capacity utilisation survey revealed mixed performances across sub-sectors. While overall capacity dropped slightly by 0.1 percent compared to 2022, specific sub-sectors such as furniture, paper, and leather recorded significant declines of 11 percent, 8 percent, and 6.5 percent, respectively.

Respondents cited several challenges impacting growth, including high production costs driven by energy tariffs, taxation, compliance costs, and outdated equipment. Additional constraints include difficulties in accessing affordable financing, regulatory bottlenecks, and lack of technological advancement needed to reduce operational costs.

Energy Stability Driving Growth

One of the key enablers for recovery is improved energy supply, which has historically hampered industrial production. Recent statistics from the energy sector show a 15 percent increase in electricity output compared to last year, a development already benefitting manufacturers.

Economist Tinevimbo Shava noted the significance of this stability.

“Energy stability, combined with access to affordable financing, is creating a conducive environment for manufacturers to scale up production. We are seeing more companies taking advantage of the retooling facility to modernise operations, which will boost output and competitiveness,” Shava said.

Economic Ripple Effects

Economists believe that the projected rebound in manufacturing could have broader economic benefits, including job creation and reduced reliance on imports, which would save critical foreign currency reserves.

Economist Dr Prosper Chitambara commended the government’s initiatives but emphasised the need for consistency in implementation.

“While the Government has put forward commendable policies, the success of these measures depends on how effectively they are executed. Manufacturing is the backbone of economic growth, and its recovery could have ripple effects across other sectors,” Chitambara told The Herald.

Path to 55 Percent Capacity

As Zimbabwe targets 55 percent capacity utilisation by 2025, stakeholders are optimistic about the manufacturing sector’s role in driving economic growth. However, achieving this goal will require continued collaboration between the government, private sector, and financial institutions to address lingering challenges.

“With the right support, manufacturing could once again become a cornerstone of the nation’s economy,” Dr Chitambara added.

By scaling up production, the sector is poised to create jobs, improve competitiveness, and bolster the country’s economic resilience, The Herald reports.