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Companies capacity utilisation faces plunge

ZIMBABWEAN industry is still hamstrung by a number of macroeconomic challenges that have seen companies shut down and thousands of employees being laid off amid fears the country’s average capacity utilisation may crumble from 39,6% reported in 2013, businessdigest has learnt.

Taurai Mangudhla

Confederation of Zimbabwe Industries (CZI) president Charles Msipa on Wednesday said industry would celebrate if it manages to maintain the 39,6% average capacity utilisation in the CZI manufacturing sector survey results to be released between June and July as the operating environment remains tough.

He said infrastructure bottlenecks such as lack of adequate electricity and water supplies, lack of funding, reduced or low aggregate domestic demand have weighed down industry.

“If we can maintain 39% this year and if we can arrest decline in capacity utilisation, that will be quite an achievement, then we build on that,” Msipa said on the sidelines of a Nestle Zimbabwe sponsored 2014 Creating Shared Value (CSV) forum.

“We continue to see business closures and job losses and let’s hope government’s policies on duty exemptions on raw materials and exports works.”

A 2013 National Social Security Authority Harare Regional Employer Closures and Registrations Report for the period July 2011 to July 2013 shows 711 companies in Harare closed down, rendering 8 336 individuals jobless.

In addition, many companies are downsizing and have retrenched tens of thousands of their employees, condemning them to a gloomy future.

Major companies that have retrenched, according to the report, include platinum miners Zimplats and Unki, Bindura Nickel Corporation, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.

Msipa said in 2011 industry capacity utilisation averaged 57% before it dropped to 44% in 2012 and 39,6% in 2013.
He said capital constraints are expected to remain a challenge to industry until favourable and clear policies are put in place.

Even after enacting new policies that instill confidence among foreign investors, he said, the country will go for up to a year before foreign direct investment starts trickling in.

“Looking at the capital and liquidity issue, there is no miracle quick fix to it,” Msipa said.

He said the country needed policies that promote capital inflow. He said investors are raising concern over policy inconsistency.
“If they are credible and one earns confidence we can then start to see benefits in between 6 to 12 months,” he said.

Industry and Commerce minister Mike Bimha said government remains commited to creating an enabling environment for industry to thrive.

“As government, we acknowledge the financial challenges facing industries. Despite the challenges in accessing funds, government is making frantic efforts to find affordable funds, especially to those companies which have downstream benefits to other firms,” Bimha said at the CSV forum.

“Such enabling environment will be provided in the Special Economic Zones (SEZ). The SEC paper is now in place and a road map which will lead towards the operationalisation of the concept has also been developed.”

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