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(HERALD) Industrial production capacity surges: CZI

Industrial production capacity surges: CZI
Thursday, 03 November 2011 00:00
Bright Madera Senior Business Reporter

MANUFACTURING sector capacity utilisation has risen 13,5 percent to 57,2 percent in the 12 months to June 2011 due to an increase in capital investment projects. A Confederation of Zimbabwe Industries manufacturing sector survey for 2011 released yesterday showed that production capacity continued to increase from 10 percent in 2009 in the absence of medium- to long-term funding to re-equip industry.

Investment levels have increased by five percent to 47 percent. In the first six months of the year, capital investment was estimated above US$43,4 million.

Government had a capacity utilisation target of 60 percent and the sector is expected to grow by three percent this year.

The survey, which sampled 120 companies from 13 sectors of manufacturing, showed that capacity utilisation levels vary from lower levels of 30 percent to as high as 74 percent.

Overall output volume continues on the upward trend, increasing by 14,1 percent in the period under review.

The sector has continued on a growth trajectory in the absence of funding from international partners who have not been responsive.

Zimbabwe's manufacturing sector requires an estimated US$2 billion to operate at full capacity.

Vice President, Joice Mujuru, the guest of honour, said Government was committed to source funding for the sector, the cornerstone of economic development.

"The financial sector should put in place strategies to improve lending to the sector and Government will continue to call for the lifting of sanctions to access lines of credit," said the vice president.

She added that erratic power supplies were affecting economic growth and that challenges were opening opportunities to invest across all sources of energy.

CZI president, Dr Joseph Kanyekanye said: "It is also quite evident that the level of external budget that could free resources for lending to industry has not been forthcoming. We ought to come together as Zimbabweans to fight this."

Low production demand, machine breakdown, lack of working capital and lack of raw materials were identified as the major constrains in the sector.

During the first half of the year it is estimated that volumes of domestic raw materials decreased eight percent and that of imported raw materials decreased by 57 percent.

CZI attributed the drop in raw materials to the increase in the cost of raw materials.

The cost of raw materials is estimated to have increased by almost 100 percent.

According to the survey, most companies are still producing for the domestic market. Exporting companies indicated depressed volumes due to working capital to meet orders and unavailability of raw materials.

In addition, the cost of production remained high, with continued rises in the cost of labour and the cost of utilities. High costs of production coupled with low levels of capacity and inferior product quality has largely rendered Zimbabwe's manufactured products uncompetitive on the international market.

The survey also noted that exports from Zimbabwe were confined to Africa, mainly southern Africa, with only two percent exporting to East Africa and another two percent to Europe.

Neighbouring Zambia has emerged the country's biggest trading partner replacing South Africa. Zimbabwe exports about 30 percent to Zambia followed by 16 percent to both Malawi and South Africa respectively.

Zimbabwe's manufacturing sector's contribution to Gross Domestic Product is projected to grow from 10 percent to 30 percent over the next five years.

The growth would be anchored on increased industrial output due to a cocktail of measures aimed at addressing production constraints and deliberate efforts to ensure value addition to local products.

Labels: CZI, EXPORTS, JOICE MUJURU, JOSEPH KANYEKANYE, MANUFACTURING, SANCTIONS, WELSHMAN NCUBE, ZAMBIA

posted by MrK @ 9:27 AM