Capacity utilisation seen surpassing 47 percent

CZI Matabeleland president Mr Joseph Gunda stresses a point during the Business Chronicle Pre-Budget dialogue last week

CZI Matabeleland president Mr Joseph Gunda stresses a point during the Business Chronicle Pre-Budget dialogue last week

Business Reporter
ZIMBABWE’S industrial capacity utilisation is expected to rise above last year’s figure of 47,4 percent despite some challenges that have seen some companies facing production bottlenecks mainly due to shortage of foreign currency.

Confederation of Zimbabwe Industries Matabeleland president Mr Joseph Gunda told a pre-budget seminar organised by Zimpapers last week that this year’s survey results of the country’s industrial capacity will be announced on 25 October.

“We expect the capacity utilisation to be above last year’s figure of 47 percent although there have been some challenges of recent, mainly on foreign currency,” he said.

Contrary to the broad assertion that Bulawayo was dead, Mr Gunda said there were a number of companies operating in the city that were doing well.

“On the state of Bulawayo companies, we have some positives. Monarch Steel has increased its exports by more than 167 percent while United Refineries is also diversifying and introducing new products on the market,” said Mr Gunda.

He added that Datlabs has increased capacity to around 70 percent while Baker’s Inn recently acquired and installed new production lines at the Bulawayo factory.

“Proton Bread has also moved in and Shepco has acquired BMA fasteners which is extending into the region. Motavac has also increased its distribution networks in Bulawayo.”

He added that Bulawayo companies, like most in other cities were also facing challenges mainly the shortage of foreign currency.

“Another problem is the high cost of production and failure to access lines of credit. Our companies are also facing completion from imported goods and the issue of legacy debts, especially Zimra, NSSA and Zimdef is a big challenge.”

Last year CZI reported that capacity utilisation rose to 47,4 percent up from 34,3 percent in 2015, mainly driven by an import ban imposed by the Government earlier in the year. The figure was the second highest level of industrial capacity utilisation — a measure of industry’s use of installed productive potential — since dollarisation in 2009, after the peak of 57,2 percent reported in 2011. Capacity utilisation in the post-dollarisation period peaked at 57,2 percent in 2011, before sliding to 44,2 percent in 2012, 39,6 percent in 2013 and 36,3 percent in 2014.

Most local companies have been ramping up production after Government came up with Statutory Instrument 64 last year.

SI 64 offered local firms immense opportunities to retool and modernise in order to produce products that the country used to import, thereby saving the much needed foreign currency and in turn resuscitate industry, especially the manufacturing sector whose performance had been negatively affected by an influx of cheap imports.

The goods under SI 64 of 2016 include furniture, beds, wardrobes, dining room suites, office furniture, bottled water, mayonnaise, salad cream, peanut butter, jam, mahewu, canned fruits, vegetables, pizza, yoghurts, flavoured milks, dairy juice blends, ice creams, cultured milk, cheese, coffee creamers, camphor creams, white petroleum jellies, body creams and plastic pipes.

The SI also controls the importation of wheelbarrows, parts of structures of iron or steel, roofing frameworks, doors, windows and their frames and threshold for doors, plates, rods, angles, shapes section, plastic pipes and fittings, flat-rolled products of iron or non-alloy steel (of a width of 600mm or more), clad-plated or coated and corrugated steel roofing sheets, importation of second-hand tyres (all retreaded or used pneumatic tyres of rubber), baler and binder twine, fertilisers (urea and ammonium nitrate), compounds and blends, tile adhesive and tylon, shoe polish, synthetic hair products are also in the list of products whose importation has been banned.