HomeBusiness DigestZim industrial sites now ghostly

Zim industrial sites now ghostly

THE hum of heavy machinery, once a defining feature of the city, is long dead in Harare’s Graniteside industrial area.

Report by Paidamoyo Muzulu

The city’s industrial hub sounds quiet and looks desolate, as some of the once-smoking chimneys last puffed several years ago.

One is usually struck by the eerie silence which now envelopes the once-bustling Graniteside industrial zone as incessant power cuts and load-shedding take their toll on the country’s manufacturing sector. Thousands of companies have closed in the last decade due to a myriad of problems dogging Zimbabwe.

If one thinks Harare is now industrially dead, they have not been to Bulawayo or heard about the crisis there in recent years. Bulawayo — Zimbabwe’s once renowned industrial centre — is now deathly silent as the wheels of industry have ground to a halt.

The city’s industrial heartland, Belmont, is now like a cemetery. Gweru, formerly home to thriving businesses like Bata shoe company, has not been spared the same fate. The situation is the same in Kwekwe, Redcliff, Mutare and Masvingo, among other towns.

The latest Confederation of Zimbabwe Industries (CZI) paints a gloomy picture.

“Contrary to what happened in the last three years, the manufacturing sector is now at best in a state of stagnation with many companies in decline or closed,” CZI president Kumbirai Katsande said recently.

“Capacity utilisation has gone down from 57,2% in 2011 to 44,9% in 2012. Export sales are static. And business confidence is very low. Manufacturers believe the economy will not improve in 2013. Our labour laws are inflexible and are now a hindrance to business performance,” Katsande said. “Labour law reform is unavoidable. It is time for Zimbabwe to directly resolve these fundamental problems. There is no way out.”

Analysts say while multifaceted economic problems have led to company closures, shortages of power have made the situation worse as energy is key.

The country’s industrial capacity utilisation has suffered huge knocks from the energy deficiency whose solution remains elusive. According to Treasury, capacity utilisation plummeted to below 50% in 2012 after initially showing an upward trend last year.

Only the wood and furniture industry is booming with the highest capacity utilisation of 95,5%, while the clothing and footwear sector has the lowest at 9,7%. Other sectors like drinks, tobacco and beverages are operating at 63,3%; paper, printing and publishing 19,2%; while chemicals and petroleum limp at 33,5%.

Zimbabwe’s energy needs are largely met by imports from the region. The country’s power generation plants, some of which have outlived their economic lifespans, have been operating at just above 50% capacity, resulting in debilitating load-shedding schedules lasting up to over 10 hours in some cases.

Zimbabwe is producing an average 1 200 megawatts a day against a demand of 2 100MW, a scenario blamed on the lack of significant investment in the energy sector since Independence in 1980.

Finance minister Tendai Biti says the country needs at least US$4,3 billion investment in the energy sector to generate  sufficient power between now and 2020. This amount is almost 120% of the country’s revised 2012 national budget of US$3,4 billion.

Government is mulling the Kariba South expansion and rehabilitation of the Hwange Thermal Power Station to increase production. However, progress has been slow because of lack of funds.

Authorities recently awarded Sino Hydro, a Chinese conglomerate, the tender to carry out the Kariba South expansion project in a bid to add an extra 600MW to the national grid.

Zimbabwe is however still to start work on the Batoka Gorge hydroelectric plant as it battles to clear US$70 million it owes Zambia before the project can commence. The debt was inherited from the federation era of between 1953 and 1963. Batoka would produce about 1 000MW.

To alleviate the energy problem incapacitating the economy, the Zimbabwe Energy Regulatory Authority last week licenced 11 independent power producers (IPPs).

The CZI last week won a case in the Administrative Court to have Zesa’s 2009 tariff increases declared illegal, although the company is still trying to hike charges despite consumer protests.

Economic Planning and Investment Promotion minister Tapiwa Mashakada confirmed on Monday while presenting a review of the Medium Term Plan Zimbabwe had missed its target on power generation.

“We are 10 to 15 years behind Sadc. We must run this distance over the life of the MTP,” said Mashakada.

Industrial and domestic consumers hope government would deliver on energy supplies so factories can reopen and more jobs are created, while households would be spared frequent, unscheduled power outages.

Reliable energy supplies would also arrest the problem of deforestation which has increased at an alarming rate as people chop down trees for firewood. But for now energy deficits remain one of the biggest problems facing Zimbabwe’s battered economy.

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