ZIMBABWEAN industry’s capacity utilisation has slumped to an all-time low with information this week that most companies are operating at a quarter of their capacity.
>The Zimbabwe National Chamber of Commerce (ZNCC) said although it is yet to conclude a comprehensive study on the state of industry, preliminary research indicates that most companies are now operating at 25% of capacity.
This is arguably the lowest level since Independence in 1980. Political uncertainty and lack of investor confidence have been blamed for the parlous state of Zimbabwe’s economy. Foreign currency, fuel, power and water shortages have precipitated the rapid plunge in industrial capacity utilisation.
ZNCC president Luxon Zembe confirmed that initial feedback from its 2 500 members showed that industry was operating at about a quarter of capacity.
At its worst in 2003, industry operated at about 35%, but the new levels show that contrary to government claims that things are getting better, the economy is getting worse.
“Things are really bad in industry,” Zembe said.
“A number of our members have closed down,” he said. “Fuel, water and power are in short supply. But the biggest cause of the problem is the foreign currency shortage.”
Most ZNCC members have not received foreign currency from the Reserve Bank of Zimbabwe’s auction market in the past five months. They have not been able to buy crucial raw materials to operate.
Zembe warned that things could still get worse.
“The economy is in the intensive care unit and there is need for a major policy shift if things are to get better,” he said. He blasted what he called “discord, incoherence and distortions” in government policies.
“The economy is bleeding because there is no policy consistency. The government and monetary authorities are pulling in different directions.”
The recent attack on the International Monetary Fund (IMF) by President Robert Mugabe in Cuba soon after Zimbabwe was reprieved from expulsion shows policy contradictions.
The chamber is working on a special report which will feed into a comprehensive document to be submitted to the RBZ for consideration before the next monetary policy review. At the core of the ZNCC’s concerns to be raised in that submission would be the apparent policy confusion in the government, lack of political will and misplaced priorities, Zembe said.
He said members of the chamber were also concerned with the government’s extravagance. The members, he said, were worried that the government is splashing money on galas and air shows at a time the economy is burning.
The Air Force of Zimbabwe last week held air shows which used a lot of fuel which industry thought should have been put to better use.
Government has also spent millions of dollars on galas – something which according to Zembe, the country cannot afford in this crisis.
“Our priorities are just skewed. We are so obsessed with petty issues that do not add value to the economy,” Zembe said.