Zim economy ripe for take-off

Mr Munyaradzi Hwengwere
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THE economic stability that has taken hold following Government’s recent interventions to tame volatility in the market is likely to boost capacity in the manufacturing sector and put Zimbabwe’s economic development back on track, industrialists and analysts have said.

Since the beginning of last month, the country has been getting stable power supplies, as well as improved access to foreign currency and a firming local currency.

Economist Mr Titus Mukono said the improved business operating environment now needs industry to step up to the plate.

“We have seen relative stability or, I should say, a normal economy, where power is always there and any importer who wants foreign currency gets it without any hassle. Companies have begun to cut night shifts, which means production schedules are now normal,” he said.

Capacity utilisation in the manufacturing sector fell by 3,2 percent in the January to March period from a quarter earlier, according to the Zimbabwe National Statistics Agency (ZimStat).

“First quarter 2023 capacity utilisation for large manufacturing companies was 51,1 percent, a decline from the fourth-quarter value of 57,9 percent. For small and medium companies in the sector, capacity utilisation for the first quarter 2023 was 44,5 percent from 48,8 percent recorded in the fourth quarter,” said ZimStat.

The three major constraints on production were power shortages, cash flow challenges and growing uncertainty.

However, the Government has managed to turn around the situation.

Economy ripe  for take-off

Zimbabwe National Chamber of Commerce (ZNCC) president Mr Mike Kamungeremu said this year’s growth will be driven by recent Government policies that have stabilised the economy.

“To this end, the authorities have managed to relatively improve access to foreign currency for companies, weeding out speculative behaviour destabilising the markets and now need to tame inflation,” he said.

“Among other factors, we suggested the need to ensure a stable power supply and maintaining policy consistency, and we have been given one of the two requests, which is power availability.”

Buy Zimbabwe chief executive officer Mr Munyaradzi Hwengwere said manufacturers are doing a great job, as witnessed by the increased space taken up by locally manufactured goods in retail outlets.

“Shelf occupancy for locally produced products in retail shops increased from 70 percent in 2021 to about 80 percent in 2022. We are seeing a huge number of local products, especially in the detergents and chemicals section, as well as the confectionery department,” he said.

Ministry of Industry and Commerce Permanent Secretary Dr Mavis Sibanda told The Sunday Mail Business that the Government will push for new policy and industry support mechanisms as the current ones expire in December.

“With regard to the Local Content Strategy, we are currently working on developing local content thresholds for the pharmaceutical, fertiliser and packaging sectors.

‘‘The process will ensure the localisation of some parts of value chains and should be able to benefit more through the multiplier effect. Let me take this opportunity to applaud the players who were involved in the process,” Dr Sibanda said.

“The Government will continue to render its support towards strengthening value chains through the import management programme. The programme is aiming at supporting local industries to build production capacity and be more competitive in readiness to participate in regional, continental and global value chains.”

FBC Securities believes, if the power situation is managed well, it will be good for business in the next six months.

“While the first half of the year was characterised by erratic power supply that resulted in business disruptions and ballooning operating costs, there have been some improvements in power supply. General improvements in power supply should bode well for businesses in the second half, if sustained. Improved power supply will limit disruptions to operations, as well as reduce operating costs,” it said in a research note.